Since the release of its earnings for Fiscal Year (FY) 2024 on the 13th of February through the 20th, the stock price of global cryptocurrency exchange Coinbase Inc ($Coinbase Global, Inc.(COIN)$) has dropped by almost 14%. Going by line item trends, this flies in the face of overall trends.
Trend Drilldown
Net revenues in FY 2024 saw a solid 115% increase in year-on-year (YoY) terms, along with some interesting line item trends being confirmed.
Stablecoins see a retreat in revenue contributions, leading to a 11% reduction in the contribution of "Subscription and Services" to net revenue. "Transactions", meanwhile, saw a staggering 162% increase in revenues being contributed in early signs of 2022's highs hovering into sight for this segment.
Despite the drop in stablecoins' contribution, this category grew 31%. However, blockchain rewards and custodial fee revenues grew to well over twice past years' numbers - a trend that underlines the fact that the crypto space continues to grow unabated. "Transactions" have climbed out of a deep slowdown to registered a powerful 162% growth over last year.
At $22.8 billion, overall net income showed an astonishing 2,618% growth over past year's $0.1 billion. Increased transactions and net revenue growth weren't the only tailwinds for this; lowering expenditure played a part too.
While transaction and sales expenses remained fixed, the company's massive expenditure on technology nearly halved, leading to total operating expenses also halving. Overall, net income grew from 3% share of net revenue in FY 2023 to nearly half in FY 2024.
In the "Transactions" segment, consumers (i.e. not institutions) went from generating a little under half of net revenue in FY 2023 to a little over half at 55%. Institutions, meanwhile, remained more-or-less steady at 5% contribution.
The significance of retail investors in Coinbase's transforming fortunes isn't a lesson missed by other players in the market. Competition has been growing by leaps and bounds.
A Competitor and Bitcoin Correlations
Of particular interest amidst a plethora of alternatives in the crowded crypto access business is Robinhood Markets Inc ($Robinhood(HOOD)$), which announced the acquisition of crypto exchange Bitstamp in June last year. Bitstamp is the world's longest-running cryptocurrency exchange and offers crypto trading all over the world - much like Coinbase - and is expected to be completed by the first half (H1) of 2025.
In its quarterly earnings release one day before that of Coinbase, Robinhood declared that over half of its $672 million of transaction-based revenue — $358 million — was crypto-based, marking an over 700% jump from the same quarter last year. The quarter's revenue of $1.01 billion handily beat analysts' consensus of $946 million while reported earnings per share of $1.01 was more than double that consensus estimates.
In the new year, the market has already drawn correlations for both stocks with the performance of Bitcoin (BTC-USD or $Grayscale Bitcoin Mini Trust(BTC)$).
Of the two stocks, Robinhood is arguably better-diversified as it offers equities and other market instruments on its platform to its U.S. customers. However, in the crypto space, its sights are set to compete with Coinbase globally.
Robinhood's adhesion among retail investors with small portfolios and an interest in established cryptocurrencies hasn't been entirely missed by the market. For retail investors, Robinhood's markups and interest earnings on balances can often work out to be substantially cheaper than the costs implied by the complex fee model Coinbase operates with.
However, both stocks broke their winning streak in the Year Till Date starting from about a week ago, with President Trump's tariff struggles intensifying. While it is entirely possible that sustained tariffs might eventually promote domestic manufacturing, it will remain a pain point for U.S. citizens and businesses alike in the interim. One interesting proxy barometer for outlook on consumption, interestingly, is Walmart's sales outlook due to its long-standing status as a darling of the value-seeking cost-conscious American consumer.
Walmart's relatively gloomy outlook for 2026 indicated that the retail giant expects sales to be lower, while the current fiscal year's sales to grow by 3-4% which, when adjusted for real inflationary effects, could constitute a net decrease in total unit sales. The entire market - including recession favourites such as banks - dipped as a result on the 19th of February.
In Conclusion
If there's less money to be spent on groceries and supplies, there's bound to be less money available for investments. Given that, both Coinbase and Robinhood have had a precipitous decline over the past week despite Bitcoin rising since the 18th of February which hitherto had also led to these stocks rising.
As Robinhood's Bitstamp acquisition completes and the two platforms are integrated, across-the-board usability will likely increase via the introduction of Bitstamp's advanced trading features to Robinhood's user base. If the battle for crypto dominance is framed as being between Coinbase and Robinhood, the completion of Robinhood's Bitstamp might be the impetus needed for Coinbase to begin rationalizing its fee structure and broadening its investor accessibility.
On the basis of this, the current price depression might be an opportune moment for some investors to buy into Coinbase's stock: as line item trends trends suggest, the company's line item efficiency is rising and poised to soar higher. Of course, Robinhood's broadness of market instrument accessibility is no small thing, either.
All in all, neither Coinbase nor Robinhood is definitively better or worse than the other. The long-encumbered American consumer's behavioural outlook is the trillion-dollar question.
Professional investors with access to European exchanges can consider tactical plays on Coinbase via Exchange-Traded Products such as the “+3x Long Coinbase ETP” ($LS 3X LONG COINBASE ETP(CON3.UK)$) or the “-3x Short Coinbase ETP” ($LS -3X SHORT COINBASE ETP(CO3S.UK)$).
As the annualized volatility of both instruments indicate, it’s pretty much an even bet but the “long” has traditionally been significantly more favoured (as evidenced by turnover stats) than the “short”. Once again, it’s the investor’s prerogative to choose which way they would like to lean.
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