Coinbase COIN and Robinhood HOOD are two names that are discussed simultaneously when it comes to topics related to cryptocurrency. Both these stocks have been under the spotlight, given President Donald Trump’s crypto favoritism. Movement in Bitcoin, the largest cryptocurrency, impacts these stocks. The easing of regulatory control to accelerate crypto adoption, including institutional, raises optimism. Integrating artificial intelligence (AI) and blockchain technology to enhance security and efficiency is appreciable. However, cyber threats remain a challenge.
But as an investment option, which stock is more attractive? Let’s closely look at the fundamentals of these stocks.
America’s largest registered crypto exchange is set to benefit from higher crypto asset volatility and prices. Trump’s pro-crypto inclination and focus on regulatory clarity further benefit Coinbase. The company generated 83% of its total revenues in the United States, which is envisioned as a crypto hub. Total revenues more than doubled in 2024, which also marked two straight years of positive adjusted EBITDA.
Transaction revenues, primarily driven by trading volume, should continue to improve. In 2024, trading volume more than doubled year over year, reflecting an increase in both the total market and market share in the United States. Transaction revenues more than doubled year over year in 2024.
In an effort to enhance crypto utility, Coinbase invests in infrastructure and foundational platforms like Base — Layer 2 solution. Base is the low-cost Layer 2 solution that helps blockchains scale. Initiatives to enhance the utility of crypto via Base and Stablecoins are encouraging.
Coinbase is a fundamentally strong company. It ended 2024 with $9.3 billion in USD resources, which is defined as cash & cash equivalents and USDC, up $3.8 billion year over year.
Debt has been decreasing over the past several quarters while total debt capital ratio has been improving. Also, its higher times interest earned implies that the company can comfortably service its debt.
Management expects Coinbase to be the platform for companies that are trying to integrate cryptocurrency.
However, escalating expenses due to higher transaction expenses and other operating expenses tend to weigh on margins.
Crypto asset price risk could adversely impact operating results. A decline in the market price of Bitcoin, Ethereum and other crypto assets could have an adverse effect on earnings, the carrying value of crypto assets and future cash flows. This may also affect liquidity and the ability to meet ongoing obligations.
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Robinhood has evolved from a brokerage firm mainly trading in digital assets to a more mature and diversified entity, striving to widen its market and reach. Robinhood continues to diversify its product base to acquire new clients and gain market share.
While transaction-based revenues are expected to benefit from the company’s efforts to become a leader in the active trader market, increased retail participation and secular tailwinds, such as a higher mobile banking population and an improvement in net interest revenues, should also drive the top line.
Rapid product innovations through vertical integration will likely expand its client base, enabling greater operating leverage and paving the way for sustained profitability.
By controlling costs, the company has been successfully improving its margin.
Robinhood operates in a highly regulated industry and is subject to the scrutiny of numerous authorities. Exposure to regulatory risks, resulting in hefty fines and restrictions, may affect its profitability.
Robinhood has been incurring significant SBC expenses relative to its net revenues. Though the company aims to improve its compensation arrangement, significant SBC expenses will continue to dilute shareholders’ value in the near term.
The Zacks Consensus Estimate for COIN’s 2025 revenue implies a year-over-year increase but the same for EPS implies a 3.7% decline. EPS estimates have however moved northward over the past seven days.
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On the contrary, the Zacks Consensus Estimate for HOOD’s 2025 revenues and EPS implies a year-over-year increase of 25.4% and 34.9%, respectively. EPS estimates, however, moved southward over the past seven days.
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Coinbase is trading at forward earnings multiple of 23.83X, below its median of 25.02X over the last five years. HOOD’s forward earnings multiple sits at 27.75X, above its median of negative 10.24X over the last five years.
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Being the largest crypto exchange, COIN’s performance is solely dependent on crypto movements. In contrast, HOOD, along with cryptocurrency, offers stocks, options and exchange-traded funds, among others, providing a diversified portfolio to navigate concentration challenges. Both companies are expanding internationally, venturing across Europe and Asia Pacific regions.
HOOD shares have gained 131.3% in the past year, while COIN has lost 26.7%. While COIN sports a Zacks Rank #1 (Strong Buy), HOOD currently carries a Zacks Rank #2 (Buy). Still, at present, HOOD seems a safe investment bet.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
