Since its humble beginnings as only a Bitcoin exchange, Coinbase Global (COIN 5.68%) has matured in line with the cryptocurrency asset class. Coming a long way, Coinbase is now the premier platform for institutional and retail investors interested in the vast world of cryptocurrencies with its innovative suite of products.
Coinbase's journey (as well as crypto's) has been nothing short of historic and shows no sign of slowing down. As the cryptocurrency asset class continues to evolve, Coinbase's future looks increasingly bright. Here's where the company might be headed in the next 10 years.
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Breaking down Coinbase's financial trajectory
Projecting what a company will look like in the next decade is inherently speculative, especially when its business model depends on new technology. To introduce some objectivity, I'll examine some data and financials since numbers don't lie.
One of the most meaningful metrics to track Coinbase's growth is its user base. In Q1 2018, there were around 23 million verified users on Coinbase's platform. Today, that number has reached more than 110 million, an almost 400% increase.
Assuming the number of users continues to grow at a compound annual growth rate of 30%, Coinbase's total user base would be more than 1.5 billion in 2034, roughly the same number of users on Instagram today.
Unsurprisingly, as Coinbase's user base has grown, so has its revenue. In 2019, the company generated around $533 million in revenue. According to the most recent earnings report, total revenue for 2023 reached a whopping $3.1 billion, a nearly 500% increase in just four years at a compound annual growth rate of 41%.
If it maintains that current pace, Coinbase's annual revenue could blossom to nearly $100 billion. For comparison, that would put it on the same level as companies like Bank of America or Tesla today.
Best of all, due to Coinbase's digital infrastructure, it maintains incredibly low costs, which helps maximize profits. With profit margins north of 85%, Coinbase would be as profitable as some of the most prominent companies in the world today, such as Google or JP Morgan, if it follows this projected scenario.
A modern bank for retail and institutions takes shape
Don't get me wrong. I fully recognize that a lot has to go right for Coinbase to reach these levels. However, not only does the company have a robust business model, but it also benefits from several advantages similar to those of tech companies in the early 2000s that capitalized on the proliferation of the internet into daily life.
Cryptocurrency is a burgeoning and nascent asset class. The technology's use cases are still developing, but it holds immense potential to transform business, personal finance, and even entire economies. If things continue to progress, Coinbase's role could begin to take shape as a 21st-century tech bank.
It already offers retail users several innovative blockchain-based solutions, such as sending money instantly at no cost, providing savings accounts, and allowing users to trade cryptocurrencies. On the institutional side, Coinbase offers custodial services and a brokerage platform for companies looking to explore crypto.
This scenario of Coinbase becoming a tech bank of the future and rising to become one of the most influential companies on the market may seem outlandish. But if there's anything crypto has taught us, it's that expectations are often exceeded. Don't be surprised if Coinbase becomes a leading performer in stock portfolios over the next decade.
