Coinbase Divides Wall Street Analysts After Earnings Miss, Deribit Takeover

May 9, 2025

Coinbase Global Inc. is once again at the center of a Wall Street divide following a mixed bag of news that includes a disappointing earnings report and a bold acquisition move. The leading U.S.-based cryptocurrency exchange missed analyst expectations for Q1 2025 earnings, while simultaneously announcing a surprise deal to acquire crypto derivatives platform Deribit — a strategic play that has both excited and alarmed investors.

Earnings Miss Raises Red Flags

Coinbase reported earnings per share (EPS) of $0.41 for the first quarter, falling short of Wall Street’s consensus estimate of $0.58. While revenue climbed to $1.52 billion, driven by increased retail trading activity and higher crypto market volatility, profit margins took a hit due to rising operational expenses and legal costs related to ongoing regulatory scrutiny.

Analysts at JPMorgan downgraded Coinbase from “Overweight” to “Neutral,” citing slowing user growth and persistent headwinds in the U.S. regulatory environment. “The fundamentals are softening just as competition from offshore exchanges heats up,” wrote JPMorgan in a note to clients.

Deribit Deal Sparks Strategic Debate

Just as the market began digesting the earnings miss, Coinbase dropped another headline: a definitive agreement to acquire Deribit, the Panama-based crypto derivatives exchange known for its dominance in Bitcoin and Ethereum options trading. The deal, reportedly worth $1.2 billion in cash and stock, marks Coinbase’s most aggressive move yet into the crypto derivatives space — a segment largely untouched by U.S. players due to regulatory barriers.

The acquisition is expected to close in Q3 2025, pending regulatory approval. Deribit brings with it a global user base and daily volumes that consistently rival centralized giants like Binance Futures and Bybit.

“This is Coinbase signaling it won’t let global competitors dominate the most profitable corner of crypto,” said Dan Ives, an analyst at Wedbush Securities. “They’re betting on a future where crypto derivatives become institutionalized.”

Analysts Split on Outlook

The move has sharply divided Wall Street analysts. Bulls argue that Coinbase is taking a forward-looking stance by positioning itself to capture a greater share of institutional capital in a post-regulation crypto market. Oppenheimer maintained its “Outperform” rating, emphasizing the long-term upside from diversifying revenue streams and entering high-margin segments.

Bears, however, remain cautious. “There’s significant execution risk here,” said Needham analyst John Todaro. “Integrating a foreign derivatives platform under U.S. regulatory scrutiny could delay monetization, or worse, invite new legal challenges.”

Shares of Coinbase (NASDAQ: COIN) initially dropped 6% in after-hours trading following the earnings miss but recovered some ground on Thursday morning, buoyed by investor optimism over the Deribit acquisition.

Regulatory Questions Loom

The acquisition also puts a spotlight on how U.S. regulators will respond. Coinbase is already locked in a legal battle with the SEC, and entering the derivatives market — traditionally a high-priority area for oversight — could add complexity.

“It’s a high-reward, high-risk strategy,” said Kristin Smith, CEO of the Blockchain Association. “But if Coinbase can navigate the regulatory maze, they’ll be in a commanding position as the global crypto market matures.”

Conclusion

Coinbase’s latest quarter and acquisition reveal a company willing to take bold strategic risks even amid earnings pressure and legal uncertainty. While some analysts remain skeptical, others see the Deribit acquisition as a transformative move that could redefine Coinbase’s role in the global crypto economy.

With its financials under scrutiny and its regulatory exposure increasing, the next few quarters will be critical in determining whether Coinbase’s bet pays off