Analysis: Stablecoins, payments, and prediction markets have become new growth drivers for crypto companies, but profitability remains under scrutiny.

BlockBeats news, November 6 - The latest financial reports from Coinbase, Robinhood, and Circle show that new business growth has not yet freed them from the pressures of the crypto market cycle. Coinbase's third-quarter trading revenue fell 23% year-over-year to $590 million, with retail spot trading volume down 9% quarter-over-quarter; Robinhood also disclosed weakening crypto trading revenue. StoneX analyst Mark Palmer believes that about 60% of Coinbase's net revenue now comes from recurring businesses or activities not directly tied to spot trading, and the financial report helps dispel the view that the company is merely a leveraged bet on crypto trading volume. However, Clear Street analyst Owen Lau pointed out that the earnings beat mainly came from cost reductions rather than stronger trading. Barclays believes that reliance on spot crypto trading remains a key challenge, and due to a weak fourth-quarter outlook, it lowered Coinbase's target price from $149 to $120.

As for Circle, third-quarter reserve income fell 8% year-over-year to $658 million, and USDC supply at the end of September was about $73.9 billion, basically flat year-over-year. Although the company's total revenue grew 17% year-over-year to $865 million, $182 million of that came from the token pre-sale of the Arc blockchain; excluding this item, revenue would have fallen about 8% year-over-year. The stablecoin business growth is also facing margin pressure. The average USDC balance on the Coinbase platform reached a record $22 billion, but reward spending used to attract and retain these balances is also increasing. After deducting rewards, its stablecoin revenue grew only 3% quarter-over-quarter and fell about 16% year-over-year. Lau believes that stablecoins remain the company's most sustainable business, but the profit margin brought by each additional dollar of USDC balance is declining.

The scale of use of new businesses is still expanding. Circle disclosed that USDC transaction volume grew 49% year-over-year to $13.9 trillion, and the annualized transaction volume of its payment network reached $41.3 billion. Coinbase's prediction market daily active users grew more than 60% quarter-over-quarter, the business's annualized revenue has exceeded $200 million, and prediction markets and derivatives together contributed about a quarter of trading revenue. Based on the growth of stablecoins and prediction markets, Oppenheimer analyst Rayna Kumar raised Coinbase's target price to $207. However, Compass Point analyst Ed Engel warned that although the prediction market is growing, its profit margin is low. Clear Street also pointed out that the payments business has not yet brought substantial revenue contribution to Coinbase.