COIN: Buy the Diversification, Size for the Cycle

The market still prices Coinbase like a crypto trading venue. The more interesting evidence is that it is becoming a broader financial rail—and the stock now offers a defined, if high-risk, entry.

01The call

Speculative buy COIN at $148.68. Start with a half position in the $145–150 area. Add only on a daily close above $160. A close below $135 invalidates the setup and is the exit trigger.

Horizon: 6–12 months. This is a high-volatility position; size it accordingly.

02Why now

Coinbase's Q2 numbers establish two things at once: the business remains profitable, and its mix is broader than the headline suggests. Revenue was $1.154 billion, operating income $113 million, net income $359 million, and diluted EPS $1.36. Management also reported a third consecutive quarter of record crypto trading-volume share, a 14th consecutive positive adjusted-EBITDA quarter, and said 88% of net revenue came from outside bitcoin spot trading.

That mix shift matters. The market is still giving investors crypto-cycle risk, but Coinbase is adding stablecoins, derivatives, custody, subscriptions and Base. Q1 retail derivatives annualized revenue had already exceeded $200 million. If those rails keep gaining share, the company can emerge from the next cycle with a structurally larger earnings base.

The balance sheet gives the thesis time: cash and equivalents were $8.614 billion at June 30. At roughly 264 million diluted shares, the current price implies about a $39 billion equity value—approximately 3.0x quarter-end book equity. That is not conventionally cheap, but it is a better risk/reward than paying peak multiples for equally strong operating stories in LLY and ASML.

03Levels and triggers

• $145–150: starter zone; Friday's $148.68 close sits inside it.
• Above $160: confirmation that buyers have absorbed the post-earnings range; add the second half.
• Below $135 on a daily close: exit. The setup has failed.
• Fundamental confirmation: market share keeps rising, adjusted EBITDA stays positive, and non-transaction revenue holds up through softer crypto activity.
• Thesis break: two quarters of rising industry volume with falling Coinbase share; negative adjusted EBITDA without a clearly bounded investment step-up; or non-transaction revenue falling more than 20% year over year alongside weaker USDC balances.

04The bear case

Diversification does not eliminate correlation. A crypto drawdown can hit asset prices, retail activity, trading volumes and stablecoin balances simultaneously. Fee compression, lower interest rates, regulation, an outage or a custody failure could all damage earnings. Stock-based compensation and acquisitions can also dilute per-share value. This is why the stop and position size are part of the call—not an afterthought.

05The other two

LLY — Watch; do not chase at $1,231.94. The operating evidence is exceptional: Q2 revenue grew 48% to $22.974 billion, and Lilly raised 2026 revenue guidance to $85–87 billion. Foundayo adds an oral GLP-1 growth leg. But the stock is roughly 34x adjusted 2026 EPS guidance and about 13x sales. A better entry is below $1,100, or after another guidance increase that supports the current multiple. Thesis risk rises if obesity-franchise volume growth falls below 15% while net price declines.

ASML — Hold/watch; no new money at $1,733.48. Q2 sales were €9.3 billion, and ASML lifted 2026 guidance to €43–45 billion with a 54–56% gross margin. High-NA production use is an important milestone, but the ADR already discounts years of strong AI-capex conversion. Consider a starter near $1,600 or a confirmed close above $1,750 with improving bookings. Two consecutive quarters of book-to-bill below 1 alongside customer capex cuts would invalidate the bull case.

06Sources

• Coinbase Q2 2026 10-Q
• Coinbase Q2 earnings update
• Coinbase Q1 earnings update
• Eli Lilly Q2 2026 results
• Eli Lilly Q2 2026 10-Q
• FDA Foundayo approval letter
• ASML Q2 2026 results
• ASML High-NA readiness milestone
• Massive stock aggregates methodology

This publication is for general informational and educational purposes only and is not individualized investment advice, a recommendation, or an offer to buy or sell any security. Markets involve risk, including loss of principal. Do your own research and consider your circumstances or a qualified adviser before investing.