Will Coinbase Be a Trillion-Dollar Stock by 2035 ?
There are only seven companies worth more than $1 trillion today. These include some of the world’s most prominent corporations, such as Apple, Microsoft, and Amazon. Reaching a $1 trillion valuation is no easy task and is reserved for a select few with just the right combination of characteristics.
By 2035, the $1 trillion club will likely look slightly different. Surely, some current members will slip, but new members will also join the club. One of those could be Coinbase Global (NASDAQ: COIN).
At the time of this writing, Coinbase’s market cap is just shy of $40 billion. That means that if it were to join the $1 trillion club, it would need to grow by 2,400%. While undoubtedly that is an enormous amount, Coinbase could pull it off if it can maintain its current trajectory. Before dismissing this type of growth, let’s look at Coinbase’s past and how it provides a glimpse into its future.
Although Coinbase has only been on the stock market for a few years, the company’s founding dates back to 2012. Originally designed to make buying and selling Bitcoin more accessible for users, Coinbase’s business has evolved alongside the asset class.
How it gets to $1 trillion
Coinbase checks just about every box a company should have to be considered a candidate for the $1 trillion club. Proven growth? Check. Resilient and innovative business model? Check. Position at the forefront of a burgeoning industry? Check.
But to show how it can join this elite club, the most practical approach is to compare it to an existing member — Meta (NASDAQ: META).
Even though Meta (previously Facebook) derives most of its income from advertisers targeting audiences across its social media empire, there are striking similarities to Coinbase’s crypto-centric business model.
At their core, both operate highly scalable digital platforms that don’t necessitate significant costs. Digital platforms often have lower marginal costs per user as the user base grows. Once the platform is established, adding new users typically incurs minimal additional costs, contributing to scalable and efficient operations.
Furthermore, due to their digital nature, both benefit from network effects to grow revenue. An expanding user base enhances the overall value of platforms. More users attract more participants, creating a self-reinforcing cycle that can drive more growth.
Most importantly, though, similarities between business models are evident in each company’s finances. Of the seven companies worth $1 trillion today, Meta boasts the highest profit margins at 80%. While annual revenue is second to last at $134.9 billion, its agile and light business model provides industry-leading margins no other company really comes close to.