Before you put any money into Coinbase stock, you need to understand what the company actually does, how it generates revenue, and which financial metrics separate a solid investment thesis from wishful thinking. This guide breaks down Coinbase stock for beginners, walking you through the business model, key numbers to watch, and the risks that trip up first-time investors. Think of it as your pre-flight checklist before you make any decisions about COIN.
Key takeaways
- Coinbase makes most of its money from transaction fees, which means revenue swings dramatically with crypto trading volume and prices.
- A COIN beginner guide starts with understanding the difference between the company (Coinbase) and the assets it trades (cryptocurrencies like Bitcoin and Ethereum).
- Revenue concentration, regulatory uncertainty, and crypto market cycles are the three biggest risks to evaluate before investing.
- Metrics like revenue mix, net income consistency, and user growth matter more than any single quarter's earnings number.
- You don't need to be a crypto expert to research COIN, but you do need to understand how crypto market sentiment drives the stock.
What does Coinbase actually do?
Coinbase operates a cryptocurrency exchange. It lets individuals and institutions buy, sell, store, and transfer digital assets like Bitcoin, Ethereum, and hundreds of other tokens. Think of it like a brokerage, but for crypto instead of traditional stocks and bonds.
The company also offers additional services: a custody solution for large institutional clients, a staking service where users can earn rewards on certain crypto holdings, and a subscription model that includes features like advanced trading tools. If you're new to COIN, understanding that Coinbase is a platform business rather than a crypto asset itself is the first thing to get right. When you buy COIN stock, you're buying shares of the company that facilitates crypto trading. You're not buying Bitcoin.
Cryptocurrency exchange: A platform where users can buy, sell, and trade digital currencies. Exchanges earn money primarily through transaction fees, similar to how a stock brokerage charges commissions. For investors evaluating COIN, the exchange model means revenue is tied directly to how much people trade.
How does Coinbase make money?
This is where Coinbase investing basics get interesting, and a bit tricky. The company has several revenue streams, but they don't all carry equal weight.
Transaction revenue
The biggest chunk of Coinbase's income comes from fees on trades. Every time a user buys or sells crypto on the platform, Coinbase takes a cut. The fee structure varies depending on the product (simple trade vs. advanced trading) and the user type (retail vs. institutional). Retail users typically pay higher fees than institutional ones.
Here's the thing about transaction revenue: it's highly cyclical. When crypto markets are booming and trading volumes spike, Coinbase's revenue surges. When markets go quiet, revenue can drop sharply. This is the single most important dynamic for any beginner to understand about COIN.
Subscription and services revenue
Coinbase has been working to diversify beyond transaction fees. This includes staking rewards (where the company takes a percentage of crypto staking income), interest income from custodial funds, and its Coinbase One subscription product. This revenue stream tends to be more stable than trading fees, and its growth trajectory matters a lot for the long-term investment case.
Other revenue
Smaller contributions come from things like blockchain rewards and corporate-held crypto gains. These are less predictable and generally less meaningful for evaluating the business.
When you look at Coinbase's revenue breakdown in any given period, ask yourself: what percentage comes from transactions versus subscriptions? A company that's shifting toward more recurring revenue is a different investment than one still dependent on trading spikes. You can dig into this kind of breakdown on the COIN stock research page on Rallies.ai.
What metrics matter most for a COIN beginner guide?
You don't need to track every number Coinbase reports. Focus on these, and you'll have a clearer picture than most casual investors.
Monthly transacting users (MTUs)
This tells you how many people are actively trading on the platform. Rising MTUs suggest growing adoption. Falling MTUs could signal that traders are moving to competitors or that crypto enthusiasm is cooling off.
Trading volume
Total dollar value of trades on the platform. Since transaction fees drive revenue, volume is a leading indicator of how much money Coinbase is making. Compare volume trends across quarters to see whether the business is growing, shrinking, or just riding crypto price cycles.
Revenue mix
The split between transaction revenue and subscription/services revenue. A higher and growing share from subscriptions suggests Coinbase is building a more durable business. If transaction revenue still dominates, the stock remains heavily tied to crypto market sentiment.
Net income and adjusted EBITDA
Is Coinbase profitable? Has it shown it can be profitable across different market conditions, not just during crypto bull runs? These numbers tell you whether the company can manage its costs or whether it bleeds cash when trading slows down.
Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, with certain one-time items removed. Companies use this to show operating profitability without accounting noise. For a company like Coinbase with variable revenue, it helps you see whether the core business generates cash.
Take rate
This is the average fee Coinbase earns per dollar of trading volume. If take rate is declining, it could mean competitive pressure is forcing lower fees. If it's stable or rising, pricing power is holding up. You calculate it by dividing transaction revenue by total trading volume.
What are the biggest risks if you're new to COIN?
Every stock has risks. For Coinbase, a few stand out, and they're worth understanding before you commit any capital.
Crypto market dependency
COIN's stock price tends to move with Bitcoin and the broader crypto market. When crypto prices rise, more people trade, and Coinbase earns more. When crypto enters a downturn, trading volumes collapse, and so does revenue. If you buy COIN, you're making an indirect bet on crypto market activity, whether you intend to or not.
Regulatory uncertainty
The regulatory environment for crypto in the United States and globally remains in flux. New rules could restrict how Coinbase operates, what tokens it can list, or how it earns revenue from staking. Regulatory risk doesn't mean disaster is inevitable, but it does mean the rules of the game could change in ways that are hard to predict.
Competition
Coinbase isn't the only crypto exchange. It competes with Binance (internationally), Kraken, decentralized exchanges, and even traditional brokerages that have added crypto trading. If competitors offer lower fees or better products, Coinbase could lose market share over time.
Revenue volatility
Because so much revenue depends on trading fees, Coinbase's quarterly earnings can swing wildly. A strong quarter doesn't necessarily mean the next one will be strong too. For beginners, this volatility can be unsettling. Knowing it's baked into the business model helps you avoid panic selling during slow periods.
A step-by-step approach to researching Coinbase stock for beginners
If you've read this far and you're still interested, here's a practical sequence for doing your own research. No shortcuts, just the work that matters.
- Read the business overview. Start with Coinbase's annual report or investor relations page. Understand what services they offer and who their customers are. The Rallies.ai COIN page can give you a quick snapshot.
- Study the revenue model. Look at how revenue breaks down between transactions, subscriptions, and other sources. Is the mix changing over time?
- Check profitability trends. Has the company been profitable? During what kind of market conditions? Look at net income and adjusted EBITDA across multiple periods, not just the most recent one.
- Assess user growth. Are monthly transacting users growing, flat, or declining? This tells you whether the platform has momentum.
- Understand the competitive landscape. Who else offers crypto trading? What advantages does Coinbase have (brand, compliance, user experience)? What could erode those advantages?
- Evaluate the regulatory picture. What legislation or enforcement actions could affect the business? You don't need to become a legal expert, but you should know the broad strokes.
- Consider valuation. What is the market pricing into COIN's stock? Compare valuation metrics like price-to-earnings or price-to-sales ratios with those of other financial platforms. If you're unsure how to approach valuation, the Rallies AI Research Assistant can walk you through it.
- Decide how COIN fits your portfolio. Would this be a core holding or a smaller speculative position? Given the volatility, position sizing matters. Tools like the Rallies.ai portfolio tracker can help you see how a new position affects your overall allocation.
This sequence isn't magic. It's just disciplined research. Most beginners skip straight to "should I buy?" without doing any of these steps, and that's where mistakes happen.
How is COIN different from buying crypto directly?
This trips up a lot of beginners. Buying COIN stock is not the same as buying Bitcoin or Ethereum. When you buy COIN, you own shares in a company that earns revenue from crypto markets. When you buy Bitcoin, you own the digital asset itself.
The distinction matters because COIN can underperform crypto in some scenarios and outperform it in others. For example, if Bitcoin's price rises but trading volume stays flat, Coinbase might not benefit much. Conversely, if a new wave of retail investors floods into crypto trading, Coinbase could see revenue surge even if individual crypto prices are choppy.
Some investors hold both: crypto assets for direct exposure and COIN for exposure to the infrastructure layer. Others prefer one or the other. There's no single right answer, but you should know the difference before deciding.
Try it yourself
Want to run this kind of analysis on your own? Copy any of these prompts and paste them into the Rallies AI Research Assistant:
- I'm new to investing in Coinbase — walk me through what I should understand first about their business model, how they make money, and what key metrics matter most when evaluating COIN as a stock.
- I'm new to investing and interested in Coinbase. What do I need to understand before making any decisions?
- What are the main risks of investing in COIN, and how does Coinbase's revenue change during crypto bear markets?
Frequently asked questions
Is Coinbase stock a good investment for beginners?
Whether COIN is appropriate for you depends on your risk tolerance, investment goals, and how much you understand about the crypto industry. Coinbase stock for beginners requires understanding that the company's revenue is highly cyclical and tied to crypto market activity. Do your own research and consider speaking with a financial advisor before investing.
What is the easiest way to start a COIN beginner guide?
Start by understanding what Coinbase does and how it makes money. Read the company's most recent annual report, look at revenue and user trends, and compare its business model to other financial platforms. Using a tool like the Rallies AI Research Assistant can help you ask targeted questions and get structured answers quickly.
How does Coinbase's stock price relate to Bitcoin?
COIN's stock price has historically shown correlation with Bitcoin and overall crypto market prices. When crypto markets rally, trading volumes tend to increase, boosting Coinbase's revenue and often its stock price. However, the correlation isn't perfect. Company-specific factors like operating expenses, regulatory developments, and competitive dynamics also play a role.
What are Coinbase investing basics I should know about revenue?
The most important thing to understand is that transaction fees make up a large portion of revenue, and those fees depend on trading volume. Subscription and services revenue is growing and provides more stability, but the business remains sensitive to crypto market cycles. Tracking the ratio between these revenue streams over time gives you a clearer picture of the company's direction.
Can I use AI tools to research COIN stock?
Yes. AI-powered research tools can help you analyze financial metrics, compare companies, and build investment frameworks faster. The Rallies.ai Vibe Screener lets you filter stocks based on characteristics that matter to you, and the research assistant can break down complex financial concepts in plain language. AI tools are a starting point for research, not a replacement for your own judgment.
What should someone new to COIN watch out for?
Three things above all: revenue volatility between quarters, regulatory headlines that could change how the business operates, and the temptation to treat COIN like a crypto proxy without understanding the company itself. If you're building a position, consider starting small and adding as your understanding deepens, rather than going all-in based on a single quarter's results.
Bottom line
Coinbase stock for beginners comes down to understanding one core reality: you're investing in a company whose fortunes rise and fall with crypto market activity. That's not inherently good or bad, but it's something you need to accept and plan for. The business model is straightforward, the risks are identifiable, and the metrics that matter are trackable if you know where to look.
Your next step is to start doing the research yourself. Pick one or two of the metrics above, pull up the numbers, and see what the data tells you. For more beginner-friendly guides on evaluating stocks and building a research process, explore the Rallies.ai guides library.
Disclaimer: This article is for educational and informational purposes only. It does not constitute investment advice, financial advice, trading advice, or any other type of advice. Rallies.ai does not recommend that any security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. All investments involve risk, including the possible loss of principal. Past performance does not guarantee future results. Before making any investment decision, consult with a qualified financial advisor and conduct your own research.
Written by Gav Blaxberg, CEO of WOLF Financial and Co-Founder of Rallies.ai.