COIN vs. HOOD: Which Crypto Player is a Safe Investment Bet?

Core Insights - Coinbase (COIN) and Robinhood (HOOD) are both significant players in the cryptocurrency space, influenced by regulatory changes and market movements, particularly Bitcoin [1][2] - The performance of these stocks is closely tied to the volatility and prices of crypto assets, with optimism surrounding regulatory clarity and technological integration [1][3] Factors to Consider for COIN - Coinbase, as the largest registered crypto exchange in the U.S., benefits from increased crypto asset volatility and prices, with 83% of its revenues generated domestically [3][5] - Total revenues for Coinbase more than doubled in 2024, marking two consecutive years of positive adjusted EBITDA [3] - Trading volume also more than doubled year over year in 2024, leading to a significant increase in transaction revenues [4] - The company ended 2024 with $9.3 billion in USD resources, an increase of$3.8 billion year over year, while its debt levels have been decreasing [5][6] - Management anticipates Coinbase will be a key platform for companies integrating cryptocurrency, although rising transaction and operating expenses may pressure margins [6] Factors to Consider for HOOD - Robinhood has transitioned from a digital asset brokerage to a more diversified entity, focusing on expanding its market reach and product offerings [8] - The company expects transaction-based revenues to grow due to increased retail participation and improvements in net interest revenues [9] - Cost control measures have led to improved margins, although regulatory scrutiny poses risks to profitability [10] - Significant stock-based compensation (SBC) expenses may dilute shareholder value in the near term [11] Estimates for COIN and HOOD - The Zacks Consensus Estimate for COIN's 2025 revenue indicates a year-over-year increase, while EPS estimates suggest a 3.7% decline [12] - Conversely, HOOD's 2025 revenue and EPS estimates imply increases of 25.4% and 34.9%, respectively, although EPS estimates have recently decreased [12][14] Valuation Metrics - Coinbase is trading at a forward earnings multiple of 23.83X, below its five-year median of 25.02X [14] - Robinhood's forward earnings multiple stands at 27.75X, above its five-year median of negative 10.24X [14] Conclusion - Coinbase's performance is heavily reliant on cryptocurrency market movements, while Robinhood offers a more diversified portfolio including stocks and options [15] - Both companies are expanding their international presence, targeting markets in Europe and Asia Pacific [15] - Over the past year, HOOD shares have increased by 131.3%, while COIN shares have decreased by 26.7% [17]