Crypto Winter vs Bear Market: Has Coinbase or Robinhood Fared Better?

Whether it has been the crypto winter or the bear market, both the big crypto exchange Coin base (COIN 1.04%) and the popular online brokerage house Robin Hood (HOOD 0.96%) has had a rough time in 2022. Coinbase’s stock is down more than 73% this year, and Robinhood has seen shares fall over 49%. Both businesses are struggling, as tough market conditions have frustrated private investors and slowed investment activity, which is critical to these companies and their business models. But what has held up better this year amid the turbulence? Let’s take a look.

Looking at the numbers

Although Robinhood largely helps retail investors buy stocks (along with a solid and growing crypto business) and Coinbase only sells cryptocurrencies, the two are similar given that they both offer platforms that help mostly retail traders buy and sell assets. Therefore, their businesses can be evaluated using similar metrics. Here’s a look at how some select numbers have held up at each company between Q4 2021 and Q2 this year, starting with Robinhood.

Data source: Robinhood accounting.

As you can see, Robinhood saw a big drop in assets under custody in the second quarter, but also reduced its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). The company has lost monthly active users, but has cut marketing costs by $20 million over the past three quarters. Now, here’s how Coinbase compares.

Data source: Coinbase accounting.

Since the end of 2021, Coinbase has lost fewer monthly users than Robinhood, and both companies have reduced their marketing costs by more than 42%, taking a step back amid weak investor sentiment. Coinbase’s assets have fallen much more than Robinhood’s in the second quarter, but that’s really due to the massive decline in crypto prices. In terms of income, Robinhood has held up much better and also seems to be trending in a more positive direction when it comes to adjusted EBITDA.

Who has done better?

Although Coinbase had much more revenue and adjusted EBITDA than Robinhood in Q4 2021, Robinhood made solid improvements in Q2 this year, while Coinbase saw further deterioration. Robinhood has lost several users, but not to a large extent.

Additionally, it looks like Robinhood is going to perform better. CEO Vlad Tenev said at the company’s second-quarter earnings call that it still has a goal of being adjusted EBITDA positive by the end of the year as it looks to cut expenses and grow revenue.

Meanwhile, Coinbase’s CFO Alesia Haas said on the second-quarter earnings call that the company is “working hard to operate within the $500 million adjusted EBITDA range we communicated for 2022.” Considering that Coinbase has generated an adjusted EBITDA loss of $131 million through the first half, Haas’ statement suggests that the back half could very well look worse than the first.

Given all this information, I believe that Robinhood has managed to do better in the bear market than Coinbase has in the crypto winter, and it looks like it will continue this way for the rest of 2022, barring a huge decline in crypto prices.