Both Coinbase and Robinhood went public in mid-2021, and as you can see, both of their valuations haven’t found their footing. Both of the companies were surrounded by loads of excitement at the time of their listings and haven’t totally lived up to investors’ expectations thus far. Coinbase was the 7th largest IPO in history, valued at nearly $100 billion by the time trading began and the pandemic accelerated Robinhood’s brand recognition rapidly, helping it become a notable player within the investment world.
As of 2022-11-28, Robinhood’s stock was worth 9.19 USD. As of 2022-11-28, Coinbase’s stock was worth 42.51 USD.
COIN data was taken from Yahoo Finance HOOD data was taken from Yahoo Finance
Looking at the macro data, we can gain understanding of why both of the company’s stocks have performed so poorly. Inflation has been around an ideal 2% for about 20 years, but just recently has increased to almost 9%. To counter this, central banks are expected to increase interest rates in the near future and for the last decade, U.S. interest rates have been very low. The perfect incubator for stock market performance is low inflation and interest rates, so this sudden shift has sent the markets into a bit of a panic. Also at the beginning of the pandemic, people increased the rate at which they were saving/investing their money immensely, but this hasn’t lasted. During early 2021, the macro-environment boosted stocks to unsustainable levels and many have felt the consequences since.
FINX Data is from Yahoo Finance.
In this panel we see four different graphs giving an overview of the fintech industry and its growth as a whole. The first notable analysis I would like to point out is that in the top left graph shows that the adoption of fintech grew in every segment from 2015 to 2019. These segments included borrowing, budgeting, insurance, money transfers/payments and savings & investments. This shows how fintech platforms are becoming an all inclusive platform for all banking procedures which offers the value proposition of greatly streamlining the entire finance industry. It is also worth noting that the graph on the top right hand corner of the panel shows the revenues of the industry as well as the reinvestment into these platforms has grown over each of the recent years. After highlighting these two trends it is clear that the fintech industry is on pace to continue to grow and may act as a valuable place for use and investment.
Total Number of Downloads for Leading e-trading Apps (2017 - 2021)
| Company | Downloads |
|---|---|
| Robinhood | 132471.33 |
| Fidelity Investments | 54872.19 |
| E*TRADE | 28293.68 |
| WeBull | 25608.62 |
| Schwab Mobile | 24907.66 |
| TD Ameritrade | 24641.94 |
| Merrill Edge | 6484.51 |
| TradeStation | 2045.62 |
| eToro | 1561.69 |
| Interactive Brokers | 1111.52 |
Finance app downloads have hit a sharp increase beginning in the year 2020, especially for both Robinhood and Coinbase. However, Robinhood’s downloads peaked in mid-2021 and have increased at a slower rate when compared to Coinbase’s app downloads. For crypto in particular, venture capital has invested $17 billion in crypto projects in 2021 alone (Grealish, 2021). As Coinbase sells only cryptocurrencies unlike Robinhood, that makes sense as to why Coinbase’s downloads are increasing at a quicker rate than Robinhood. With the burst of activity in crypto after the onset of the pandemic, the government is now working to regulate the industry, with Biden’s recently passed infrastructure bill requiring that all crypto exchanges notify the IRS of their transactions (Grealish, 2021). While there is still a lot of uncertainty regarding crypto, and therefore Robinhood and Coinbase’s futures, hopefully regulation works to help cryptocurrencies become more mainstream rather than push these applications out of existence.
Charts show Coinbase and Robinhood’s respective users, and the potential amount of new investment accounts to be opened in 2022 based on survey and census data. One key caveat, is that the Coinbase users are worldwide, and Robinhood users are United States only.
By looking at the Fintech survey results it is evident that consumers on the younger side of the age spectrum felt less of a need for in-person transactions and holistically do not believe that there will always be a need for in-person banking and other financial services. This survey exemplifies where the future of the financial services industry is headed and that is online. Once these younger generations become more integrated in the financial world, companies like Fintech and other online banking companies will surge while the demand for in-person financial services will decline.