Cryptocurrency investors are having a tough time in the new year. According to a Reuters report, Bitcoin, that is, the BTC-USD price, has not been able to surpass the $50,000 mark since its crash on December 4, and has fallen 12% this year.
In the past five days alone, Bitcoin has dropped by 2.3%. This fall in cryptocurrency has been fueled by a combination of macro and technical factors, according to Reuters. The report also stated that the decision by the Federal Reserve and other Central Banks to increase interest rates and withdraw fiscal stimulus could be contributing factors.
But over the long term, it seems unlikely that investors’ interest in cryptocurrency will wane. Indeed, according to a Facts and Factors market research report, the global cryptocurrency market is anticipated to be worth more than $5,190.62 million by 2026.
Against this background, using the TipRanks stock comparison tool, let us compare two exchanges that support cryptocurrency trading, Robinhood Markets and Coinbase Global, and see how Wall Street analysts feel about these stocks.
Robinhood Markets (NASDAQ: HOOD)
Shares of Robinhood have tanked 15.1% in the past five days. The financial services company allows for commission-free trading of stocks, cryptocurrencies, and exchange-traded funds.
So, what is going on under the hood at HOOD? The fall in the stock price has been fueled by disappointing Q3 results as losses widened and revenues came in below consensus estimates. The company is expected to announce its Q4 results on January 27.
Even during Q4, HOOD has a bleak outlook as it anticipates “seasonal headwinds and lower retail trading activity” to persist from Q3. As a result, the company expects to deliver revenues of $325 million in Q4, and in FY21, it expects revenues to be less than $1.8 billion.
Moreover, it seems that the company has lost the momentum in the crypto activity that it saw in Q2, as crypto-based transaction revenues came in at $51 million in the third quarter, a huge drop from $233 million in Q2.
Vlad Tenev, CEO and Co-Founder of Robinhood, mentioned on the company’s Q3 earnings call that it was “keeping a close eye on crypto as the regulatory landscape is increasingly uncertain.”
So, what are the analysts saying? Bank of America analyst Craig Siegenthaler is bearish, with a Sell rating and a price target of $22 (40.9% upside) on the stock.
While the analyst does expect “strong growth in the future,” he also outlined some key risks for the stock. These include regulatory risks, loss of COVID-related momentum for the stock, and overstated growth trajectory for the company in 2020-2021.
Moreover, Siegenthaler pointed out that HOOD already had 23 million accounts as compared to a target population of 66M adults in the U.S. in the 20 to 34 age group, implying that “future account growth in the US will be harder to generate.”
The rest of the analysts on the Street, however, are cautiously optimistic, with a Moderate Buy consensus rating based on 6 Buys, 6 Holds, and 2 Sells. The average Robinhood stock prediction of $37.93 implies upside potential of approximately 143% to current levels for this stock.
In contrast, the website traffic data available on TipRanks points to a different story for HOOD. This data indicates that the monthly growth in December for unique visitors, specifically across mobile devices, has fallen around 5.5% to 4.9 million.
However, in comparison with the same quarter last year, unique visitors to robinhood.com across mobile devices have soared 19.1% to 16.5 million.
Coinbase Global (NASDAQ: COIN)
Shares of Coinbase, the cryptocurrency exchange platform, have tanked 11.2% in the past five days, swept up in the overall decline in cryptocurrency prices.
The company had stated in its shareholder letter back in October following the Q3 earnings, that while crypto asset volatility had increased, retail traders “have historically traded more on Coinbase during periods of heightened volatility.”
As a result, the company expects that “retail MTUs [monthly transacting users] and total trading volume will be higher in Q4 as compared to Q3.”
For 2021, COIN anticipates annual average MTUs to range from 8 million at the low end to 8.5 million at the higher end. When it comes to average net transaction revenue per user, for the past two years, this has ranged between $34 to $45 per month and COIN has projected that is likely to be in the “high $50’s” per month in 2021.
Even analysts are upbeat about the stock. Bank of America analyst Jason Kupferberg upgraded the stock last week from a Hold to a Buy with a price target of $340 (51.1% upside) on the stock.
The reason for Kupferberg’s upgrade was that there are “increasing signs of revenue diversification beyond retail crypto trading, a trend we think could accelerate in 2022 and beyond.”
The signs of diversifying revenues include staking revenues, decentralized finance products, and COIN’s non-fungible token (NFT) platform, according to Kupferberg.
Coinbase defines staking revenue as comprising “the majority of Blockchain rewards revenue and is recognized on a gross basis.”
Moreover, the analyst expects that while in Q3 subscription and services revenue made up 12% of the company’s net revenues, this will comprise 16% of COIN’s net revenues in 2023.
Other analysts on the Street are cautiously optimistic, with a Moderate Buy consensus rating based on 13 Buys, 1 Hold, and 2 Sells. The average Coinbase stock prediction of $402.33 implies upside potential of 78.8% to current levels for this stock.
The website traffic data available on TipRanks backs Kupferberg’s bullish outlook about COIN. Here, I have concentrated on the unique visitors across mobile devices.
This data indicates that compared to the same quarter last year, unique visitors across mobile devices have soared 170.1% to 37 million.
Bottom Line
While analysts are cautiously optimistic about both stocks, based on the upside potential and using website traffic data as a gauge that could indicate both companies’ Q4 performance, COIN seems to be a better Buy.
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