Coinbase Global, Inc. (NASDAQ:COIN) Financial Performance and Capital Efficiency Compared to Peers

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  Posted by John Deo Mar 4 - Filed in General - #financialmodelingprep  - 26 views
  
  • Coinbase's ROIC of 13.57% is lower than its WACC of 20.00%, indicating inefficiency in capital utilization.
  • Airbnb, Inc. (NASDAQ:ABNB) showcases strong capital efficiency with a ROIC of 18.69% against a WACC of 9.13%.
  • Block, Inc. (NYSEQ) and other competitors also struggle with capital efficiency, similar to Coinbase.

  Coinbase Global, Inc. (NASDAQ:COIN) is a leading cryptocurrency exchange platform that allows users to buy, sell, and store various digital currencies. As a pioneer in the crypto space, Coinbase has established itself as a significant player in the financial technology sector. Its competitors include companies like Robinhood Markets, Inc. (NASDAQ:HOOD) and Block, Inc. (NYSEQ), which also offer digital currency services.

  In evaluating Coinbase's financial performance, the Return on Invested Capital (ROIC) is a crucial metric. Coinbase's ROIC stands at 13.57%, which is lower than its Weighted Average Cost of Capital (WACC) of 20.00%. This results in a ROIC/WACC ratio of 0.68, indicating that Coinbase is not generating returns that exceed its cost of capital. This suggests inefficiency in capital utilization.

  Comparatively, Roblox Corporation (NYSE:RBLX) has a negative ROIC of -30.41%, which is significantly lower than its WACC of 10.69%. This results in a ROIC/WACC ratio of -2.84, highlighting poor capital efficiency. Similarly, Palantir Technologies Inc. (NYSELTR) has a ROIC of 5.51% against a WACC of 17.26%, resulting in a ROIC/WACC ratio of 0.32, indicating it is not effectively covering its cost of capital.

  Airbnb, Inc. (NASDAQ:ABNB) stands out among its peers with a ROIC of 18.69%, which is significantly higher than its WACC of 9.13%. This results in a ROIC/WACC ratio of 2.05, suggesting strong capital efficiency and value creation. In contrast, Robinhood has a ROIC of 9.01% and a WACC of 12.60%, resulting in a ROIC/WACC ratio of 0.72, showing it is closer to covering its cost of capital compared to some other peers.

  Block, Inc. (NYSEQ) has a ROIC of 3.98% and a WACC of 14.81%, resulting in a ROIC/WACC ratio of 0.27. This indicates inefficiency in capital utilization, similar to Coinbase. Among the companies analyzed, Airbnb emerges as the leader in capital efficiency, with the highest ROIC/WACC ratio, indicating its ability to generate returns above its cost of capital.