The Scissors Open Wider
Q2 2026: every franchise metric made an all-time high while the cyclical economics made new lows. The reconciliation is still priced in the bulls’ favor. Fair value unchanged at ≈$102.
Band figures: Coinbase Q2'26 earnings deck (8-K, acc. 0001679788-26-000087, 30 Jul 2026); Q3 pace is our annualization of the company's disclosed QTD figure; price is the FMP post-market last trade, 30 Jul 2026 ~6:30pm ET.
Coinbase reported Q2 2026 after the close on July 30: total revenue of $1,220M (−14% Q/Q, −19% Y/Y) against consensus near $1.29B, a GAAP net loss of $(359.5)M, and adjusted EBITDA of $207.8M — the fourteenth consecutive positive quarter. The stock fell about 5% in post-market trading to roughly $155. The print is the cleanest single-quarter illustration yet of the split our July note was built on: the franchise is compounding and the cycle is cutting, and the two moved further apart this quarter, not closer together.
The upper blade: every franchise metric made a high
Market share in total crypto trading volume reached 10.3%, an all-time high and the third consecutive quarterly record, with gains in both spot and derivatives — through a market whose spot volumes fell 25% Q/Q. Average USDC held in Coinbase products hit an all-time high of $20B, more than 30% of all USDC in circulation; the company now captures roughly half of total USDC economics. Crypto derivatives volume held approximately flat Q/Q at a $4.2T trailing-twelve-month pace against a derivatives market down double digits. And a business line that did not exist in our model — prediction markets — crossed $100M in annualized revenue, up 106% Q/Q, within two quarters of reaching scale.
The lower blade: the cycle keeps cutting, and Q3 opened worse
Transaction revenue fell 21% Q/Q to $599M (consumer $452M, institutional $100M, other $47M). First-half 2026 total revenue of $2.63B annualizes to roughly $5.3B against FY2025’s $7.2B. The sharper datum is forward: Coinbase disclosed only ~$130M of transaction revenue quarter-to-date through July 26 — a pace of roughly $460M for Q3 if it holds, another 23% below Q2. The “normal year” in our reverse-DCF — the normalized $1.7B of net income needed to justify $165 — is receding, not approaching. The GAAP loss itself remains marks and one-timers rather than operations: $209.5M of losses on crypto held for investment, $49.9M of other net expense, and a $52.4M restructuring charge; adjusted net loss was $(104.9)M.
Exhibit 1 · The scissors: market share vs total revenue, Q2'23–Q2'26 Exhibit 2 · Marks, not operations: net income (loss) vs adjusted EBITDAThe stablecoin line has a rate problem
Our July note set a bull-case revisit trigger at a stablecoin run-rate above $1.6B. Actual: $292M in Q2 — a $1.17B annualized pace, down 5% Q/Q and down for a second consecutive quarter. The balance story is genuinely strong (record $20B average USDC on platform), but falling rates are eating the monetization faster than balances are growing it. This is the single clearest case in the print of a franchise metric and its revenue line moving in opposite directions — the scissors in miniature.
Exhibit 3 · Stablecoin revenue annualized vs the July note's $1.6B revisit triggerWhat actually changed at the pivot
- Cost structure reset. A 14% May headcount reduction (4,988 → 4,321 FTEs) and FY’26 adjusted-expense guidance cut to $4,200–4,450M (implying GAAP T&D + G&A + S&M of $4,340–4,600M) — roughly $600M below the 2025 annualized exit rate and $300–500M below the ~$4.9B fixed-opex base in our normalized model. Worth several dollars per share of fair value in isolation; a defensive cut made because revenue is falling, not found money.
- A new revenue line. Prediction markets at $100M+ annualized (+106% Q/Q) is worth only ~$1–2 per share at current scale but earns a line in the next full model revision.
- Capital returns are real. $2.0B+ returned since Q4’24 (10.1M Class A shares repurchased, 85%+ of stock-comp issuance offset), $2.0B of authorization remaining, and the share count fell for a second straight quarter (264M). This blunts the dilution criticism in our quality-of-earnings section.
- The balance sheet. ~$10B of available resources: $8.6B cash and equivalents plus $1.6B of crypto and marketable investments.
- The loss mechanics. Marks on crypto held for investment drove the GAAP loss for a third consecutive quarter; adjusted EBITDA stayed positive, as it has in every quarter of the dataset.
- The valuation gap. At ~$155 the market still pays a good-year multiple on good-year earnings the company is not currently producing — Q2 adjusted net income was negative.
Trigger check: nothing tripped, verdict unchanged
NOT TRIPPED
NOT TRIPPED
NOT TRIPPED
Sources & Method
Reported figures. All Q2’26 income-statement, revenue-detail, expense, guidance, balance-sheet, market-share, USDC, prediction-markets, and buyback figures are from the Coinbase Q2’26 earnings deck, Exhibit 99.1 to Form 8-K, SEC accession 0001679788-26-000087, filed and pulled via EDGAR (edgartools) on 30 Jul 2026 — specifically the Financial Recap and Income Statement appendix tables (Q2’25–Q2’26) and the quarterly chart series (Q2’23–Q2’26) read from the deck’s labeled data points. Company definitions apply to Crypto Trading Volume Market Share (spot + derivatives + stablecoin volume vs Coinbase’s proprietary competitor set, per the deck’s footnotes) and Adjusted EBITDA / Adjusted Net Income / Adjusted Expenses (non-GAAP; reconciliations in the deck appendix). Vintage of all reported data: quarter ended 30 Jun 2026, as filed 30 Jul 2026.
Market data. COIN $154.60 is the post-market last trade, 30 Jul 2026 ~6:30pm ET (Financial Modeling Prep real-time quote, pulled 30 Jul 2026); the $159.68 reference is the pre-market quote logged 30 Jul 06:41 PT. Consensus (≈$1.29B revenue, ≈$628M transaction revenue) and the ~5% post-market reaction per CoinDesk, “Coinbase sinks 5% after missing Q2 revenue estimates,” 30 Jul 2026, cross-checked against the issuer press release (investor.coinbase.com, 30 Jul 2026).
Transformations (ours, labeled). Stablecoin run-rate = reported quarterly stablecoin revenue × 4. Q3 transaction-revenue pace = disclosed $130M QTD through 26 Jul ÷ 26 days × 92 days ≈ $460M; this is a straight-line extrapolation of a company-disclosed partial figure, not guidance. H1’26 annualization = (Q1’26 + Q2’26 revenue) × 2. FY2025 revenue = sum of the four reported 2025 quarters ($7,181M).
Estimates and assumptions. The “$300–500M below our fixed-opex base” comparison sets the new GAAP T&D+G&A+S&M guidance range against the ~$4.9B normalized fixed-opex assumption in our July model; the “several dollars per share” and prediction-markets “~$1–2 per share” figures are order-of-magnitude estimates at the model’s base-case multiple, not model reruns. Fair value ($102; bear $42 / base $83 / bull $201 at 25/50/25) is carried unchanged from the July model (model.py, 4 Jul 2026 vintage): normalized EBIT = revenue − 22% × (transaction + staking revenue) − fixed opex, plus the balance-sheet layer.
Prior TON618 research relied upon. Coinbase (COIN): The Right Company at the Wrong Price (5 Jul 2026) — the model, scenario weights, reverse-DCF, and revisit triggers referenced throughout.
Disclosures
Information only. TON618 Capital. This report is for information purposes only. Nothing here is an offer to sell or a solicitation of an offer to buy any security, fund interest, or digital asset, and nothing here is personalized investment advice or a recommendation regarding any instrument.
Publisher’s exclusion. All research is published solely as general, impersonal information of regular circulation. It is not tailored to the objectives or circumstances of any individual and is not issued in connection with compensation from any client. The Fund has no clients and distributes all research free of charge. On that basis it publishes in reliance on the publisher’s exclusion from the definition of “investment adviser” under the Investment Advisers Act of 1940 (§202(a)(11)(D); cf. Lowe v. SEC, 472 U.S. 181 (1985)).
Registration & conflicts. TON618 Capital is not registered as an investment adviser or broker-dealer in any capacity. The Fund is a Bitcoin fund and may hold or transact in the securities or digital assets it discusses; material conflicts are disclosed where they exist. The Fund holds BTC and holds no position in COIN. The Fund receives no compensation from any party in connection with its research.
Use of AI. Artificial intelligence is used in the creation of this research. All methodology and data integrity are reviewed and approved before publication by TON618 Capital’s Chief Investment Officer, Keyth Beck; errors may nonetheless occur, and readers should verify independently.
CFA. This report was prepared to align with CFA Institute analytical standards (methodology only). CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute. That reference describes the analytical framework applied; it does not imply the report was prepared, reviewed, or authored by a CFA charterholder, and the report is not issued, reviewed, endorsed, certified, or approved by — nor affiliated with — CFA Institute.
Risk & feedback. Past performance is not indicative of future results. Digital assets and equities are volatile and may result in total loss of capital. Corrections and feedback are welcome — please direct them to CIO Keyth Beck at keyth@ton618capital.com.