Compass Point has trimmed its expectations for Coinbase, cutting its price target on the crypto exchange’s stock even as it anticipates a slate of new products to be revealed this week. In a new report published Monday, analysts at the investment bank lowered their target for COIN shares to 230 dollars from 266 dollars and maintained a “Sell” rating, signaling that they see downside risk despite potential growth initiatives.
The report focuses on two upcoming product categories that Coinbase is expected to spotlight at an event on Wednesday: tokenized stocks and prediction markets. Both are framed as key pieces of the company’s strategy to reduce its dependence on volatile trading fees from spot cryptocurrency transactions, which still make up the bulk of its revenue.
Compass Point’s analysts argue that tokenized stocks could ultimately become the more meaningful business line for Coinbase compared with prediction markets. Tokenized stocks are blockchain-based representations of traditional equities—such as major tech or blue-chip names—that can trade on-chain, potentially 24/7, with features like fractional ownership and instant settlement. According to the report, this segment alone could generate around 230 million dollars in annual revenue for Coinbase once it is fully ramped, compared with the roughly 210 million dollars they project from prediction markets.
The analysts caution, however, that neither of these opportunities will translate into immediate financial windfalls. They describe the revenue outlook as a “multi-year” story, emphasizing that regulatory approvals, user adoption, product design, and liquidity will all take time to develop. In their view, investors who are excited by the narrative of diversification still need to grapple with the reality that Coinbase’s near-term financial performance remains tightly tied to crypto market conditions and trading volumes.
By reiterating a “Sell” rating despite these growth initiatives, Compass Point signals that it believes Coinbase’s current share price already bakes in much of the optimism around its product roadmap. The lower price target reflects concerns about competitive pressures, regulatory uncertainty in key jurisdictions, and the possibility that monetization of new offerings may be slower or smaller than bulls expect.
Tokenized stocks, if rolled out at scale, could significantly reshape Coinbase’s business mix. The concept appeals to both crypto-native traders and more traditional investors who are comfortable with equities but interested in the flexibility of blockchain rails. For Coinbase, they offer the chance to earn not just transaction fees but potentially listing fees, custody fees, and interest or spread-based income tied to underlying assets. Moreover, tokenized stocks open doors to markets where access to U.S. equities is currently difficult, provided Coinbase navigates local rules correctly.
Prediction markets, by contrast, allow users to bet on the outcomes of events—elections, economic data releases, sports results, or crypto-specific milestones—using tokens that pay out depending on what actually happens. The Compass Point report notes that this line of business could appeal to Coinbase’s existing retail base, offering a more “gamified” experience that keeps users engaged even when crypto price volatility subsides. Still, prediction markets operate in a regulatory gray area in many countries, often touching on gambling, derivatives, or securities law. That legal complexity is one reason Compass Point appears more cautious about the size and durability of this revenue source.
The analysts also point out that while tokenized stocks and prediction markets might diversify Coinbase’s top line, they do not fully solve the company’s exposure to broader regulatory trends. Tokenized versions of traditional securities will likely be scrutinized by securities regulators, while event-based markets may attract attention from both financial and gaming authorities. Any misstep could lead to enforcement actions or forced product rollbacks, creating headline risk and additional compliance costs.
From a strategic perspective, Coinbase’s push into tokenized assets aligns with a broader industry thesis: that the next phase of crypto adoption will involve putting real-world assets—equities, bonds, currencies, and even real estate—on-chain. If that thesis is correct, early movers with strong brand recognition, regulatory relationships, and infrastructure could capture a disproportionate share of the value. Compass Point’s numbers, however, suggest that even a successful first iteration of these products would still represent only a fraction of Coinbase’s current revenue base, especially in robust bull markets when trading fees surge.
The timing of Compass Point’s downgrade ahead of Coinbase’s event underscores a tension between story and fundamentals. On one hand, a diversified product set makes Coinbase less dependent on boom-and-bust cycles in crypto spot trading, which investors tend to reward with higher valuation multiples. On the other hand, building, marketing, and supporting these new platforms demands ongoing investment in technology, legal work, and customer support—costs that can weigh on margins before revenues fully ramp.
Competition is another concern highlighted between the lines of the report. Tokenized stocks are already being pursued by several crypto-native platforms, fintech startups, and even some traditional financial institutions experimenting with blockchain. Prediction markets, meanwhile, face both on-chain competitors and established betting or derivatives platforms that may move into similar territory. Coinbase’s brand, regulatory posture, and user base are clear advantages, but Compass Point appears unconvinced that these will automatically translate into dominant market share.
For shareholders, the updated target to 230 dollars per share reflects a more conservative stance on Coinbase’s ability to turn innovation into durable earnings growth. The analysts appear to be signaling that while Coinbase is rightly trying to position itself as a broader digital asset and financial infrastructure company, the path from product announcement to meaningful, recurring revenue is longer and riskier than some investors might hope.
At the same time, the report implicitly acknowledges that the direction of travel is strategically sound. Moving beyond simple crypto spot trading into tokenized securities, structured products, derivatives, and event-based markets could, over time, make Coinbase’s revenue base more resilient. In an environment where regulators are gradually clarifying rules and institutions are experimenting with blockchain-based settlement, being early and visible in tokenized stocks may help Coinbase secure partnerships and institutional clients that are less sensitive to daily crypto price swings.
The key question now is execution. Coinbase will need to demonstrate that it can design these products in a way that satisfies regulators, attracts liquidity providers, and offers a smooth user experience for both retail and institutional customers. It will also have to show discipline in balancing growth initiatives against profitability, particularly if crypto markets enter another prolonged period of low volatility and subdued trading volumes.
In that sense, Compass Point’s move to cut its price target while mapping out sizable, but distant, revenue opportunities serves as a reminder: Coinbase’s narrative as a diversified, next-generation financial platform is compelling, but investors are still navigating between long-term potential and short-term realities. Tokenized stocks and prediction markets may well become important pillars of the business—just not quickly enough, in the analysts’ view, to justify a richer valuation today.