Coinbase Global Inc.’s horde of retail cryptocurrency traders may be turning to Robinhood Markets Inc., according to one analyst.
(Bloomberg) — Coinbase Global Inc.’s horde of retail cryptocurrency traders may be turning to Robinhood Markets Inc., according to one analyst.
Mizuho Securities analyst Dan Dolev argues that data from April indicates the firm may be losing market share in retail crypto transaction volume to Robinhood, the trading app that became prominent for its appeal to at-home stock traders.
“There is no perfect explanation for potential share losses aside from worries about regulatory pressures given SEC actions against crypto, or the increase in small-ticket item retail trading fees at Coinbase,” Dolev wrote.
Read More: Coinbase Faces ‘Life or Death’ Battle as US Slams Crypto Company
Pressure from regulators increased last week when the US Securities and Exchange Commission sued the company, arguing that some digital coins are securities. That came one day after a more sweeping lawsuit against fellow crypto-trading platform Binance Holdings Ltd.
Read More: Crypto Gets Its Moment of Clarity, But Not the One It Wanted
Dolev’s underperform rating and Street-low $27 price target makes him one of the most bearish analysts covering Coinbase.
Coinbase is either losing competitive share to Robinhood or its take rates — what they get to keep from each transaction — declined, Dolev found, based on his analysis of data from Coinbase’s shareholder letter and Robinhood’s monthly metrics report. He argues against assuming that retail take rates were steady or moved lower.
Coinbase shares fell as much as 5.5% on Thursday amid a broader downturn in cryptocurrency-linked stocks, before paring the drop to be little-changed. The stock is still up by approximately 50% on the year. Robinhood fluctuated between narrow gains and losses.
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