In brief
- Coinbase had a good Q4.
- Robinhood did not.
- Goldman Sachs thinks they'll both underperform relative to expectations in Q1.
Peter Thiel may see Goldman Sachs as a dying relic of the financial system. But, if so, it's still a dying relic people listen to.
Robinhood shares slipped by 5% in intraday trading after Goldman analyst Will Nance downgraded the trading app's stock from neutral to sell. Coinbase was also down nearly 2.5% after Nance predicted it would join Robinhood in posting earnings well below expected Q1 projections.
In reference to Robinhood, Nance pointed to a "decline in broader industry crypto trading volumes."
Robinhood began life as a no-commission stock-trading app but later branched out to cryptocurrencies. Users can buy or sell seven different assets on the platform—Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, and Litecoin. Coinbase, meanwhile, is strictly a crypto firm, listing 170 coins and tokens, according to data from CoinMarketCap.
The first quarter of 2022 was fairly underwhelming for crypto prices compared to a volatile 2021, during which the price of Bitcoin rose from under $30,000 on New Year's to an all-time high above $69,000 in November. During Q1 of 2022, by contrast, price movements were more subdued, generally operating in a band between $35,000 and $45,000.
Coinbase posted record revenue of $2.5 billion for Q4, alongside near-record profits. While it also reported trading volume of $547 billion, Goldman predicts that will slip to $302 billion for Q1. Coinbase declined to comment on the matter to Decrypt, but also noted in its Q4 earnings call that it expected Q1 volumes to decline somewhat.
Robinhood, meanwhile, doesn't have a great Q4 to point to. Its $363 million in total revenue and $48 million in crypto revenue were up on a year-to-year basis, but below Q2 and Q3 figures. And Nance says the firm has a "limited path to near term profitability" moving forward. Robinhood declined to comment.
The trading platform has been trying to increase traction for its crypto offerings. On Thursday, it announced that users on the waitlist for its long-anticipated crypto wallet could begin using the feature to transfer their holdings off the app.
At the same time, Robinhood announced that it will be integrating Lightning Network for Bitcoin transactions. Lightning, which enables faster and cheaper payments in BTC, is also used by Twitter for its Tips feature, as well as in El Salvador for merchant transactions.
Coinbase is scheduled to reveal its Q1 earnings on May 11; Robinhood's earning report is expected later this month.