Broker
Robinhood Markets
may be beating crypto-focused rival
Coinbase Global
at its own game, attracting retail traders during a tough time for digital assets, but you would never guess that from the stock market.
Signs point to Robinhood (ticker: HOOD)—a retail investor-focused broker with offerings across stocks, options, and crypto—continuing to take market share from Coinbase (COIN), analyst Dan Dolev at
Mizuho
Securities wrote in a Friday research note. Mizuho rates Coinbase at Underperform with a target of $27 for the price. The stock closed at $83.39 on Thursday.
Coinbase lost four percentage points of market share to Robinhood in the second quarter of the year, Dolev said, adding that management commentary from both companies suggests this trend is continuing.
“Retail crypto traders are likely still flocking to Robinhood in [the third quarter,” Dolev said. “We believe this may be tied to Coinbase’s aggressive price increases for retail traders in recent months. Such increases may prove unsustainable as share losses mount.”
Coinbase has raised fees for the retail traders at the heart of its business in recent quarters, with so-called take rates from small traders increasing from 1.3% in mid-2022 to 2.2% in the second quarter, according to Dolev.
This may be beginning to pinch the embattled crypto broker, already under pressure from a spate of regulatory issues plaguing the digital asset space. Coinbase didn’t immediately respond to a request for comment from Barron’s.
Coinbase guided for flat transaction revenue in July, Dolev noted, which contrasts with Robinhood management saying they “saw trading volumes pick up in equities, options, and crypto compared to [the second quarter] monthly averages.”
It looks like Robinhood may be beating Coinbase on the crypto-focused firm’s home turf. It seems to be attracting customers during a market that has seen retail investors largely stay away from
Bitcoin,
which is seeing historically low volatility and trading volumes despite a rebound this year.
But the stock market doesn’t seem to reflect this. While Robinhood stock is up 32% this year, Coinbase shares have marched 136% higher. Perhaps a reversal of sorts is overdue.
Write to Jack Denton at [email protected]
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