San Francisco-based Coinbase Global, Inc. (COIN) provides financial infrastructure and technology for the crypto-economy. It offers the primary financial account in the crypto-economy for retail users and a marketplace with a liquidity pool for transactions in crypto assets for institutions. In comparison,  SoFi Technologies, Inc. (SOFI), which is also San Francisco-based, is a finance company that operates an online platform that provides financial services. It offers student loan refinancing, private student loans, personal loans, auto loan refinance, home loans, mortgage loans, and investments.

Despite their extreme volatility, cryptocurrencies have taken the world by storm over the past few years. While massive energy consumption in the mining process and illegal activities like money laundering remain a concern, cryptocurrency trading could keep soaring as several countries legalize these digital assets. Investors’ interest in the high-flying and digital currencies continues to grow amid favorable government policies to regulate them. Moreover, rising interest in digital collectibles should further drive the growth of crypto trading platforms. Therefore, we think both COIN and SOFI should benefit.

SOFI has gained 3.7% in price over the past three months, while COIN has negative returns. However, COIN’s 15.1% gains over the past six months are significantly higher than SOFI’s negative returns.

Click here  to check out our Cryptocurrency Industry Report for 2021

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On November 30, 2021, COIN announced the acquisition of Israel-based Unbound Security. The acquisition further underlines the company’s commitment to providing a safe, secure, and trusted venue to interact with the crypto-economy.

On November 9, SOFI and Financial Planning Association launched a strategic partnership designed to benefit nearly 19,000 FPA financial planning practitioner members and the clients they serve. This joint initiative marks SOFI’s first external foray into the financial planning industry where many consumers seek professional financial advice.

Recent Financial Results

COIN’s net revenue increased 330.3% year-over-year to $1.24 billion for its fiscal third quarter ended September 30, 2021. The company’s adjusted EBITDA grew 402.4% year-over-year to $618 million, while its net income came in at $406 million representing a 401.2% year-over-year increase. Also, its EPS was  $1.62, up 604.3% year-over-year.

SOFI’s adjusted net revenue increased 43.8% year-over-year to $277.19 million for its fiscal third quarter ended September 30, 2021. However, the company’s adjusted EBITDA declined 69% year-over-year to $10.26 million, while its net loss came in at $30.05 million, compared to $42.88 million in the prior-year quarter. Also, its loss per share was  $0.05 compared to $0.70 in the year-ago period.

Expected Financial Performance

Analysts expect COIN’s revenue to decrease 1.6% in its fiscal year 2022. The company’s EPS is expected to decline 48.8% in the next year. However, its EPS is expected to grow  66.6% per annum over the next five years.

In comparison, SOFI’s revenue is expected to increase 45.3% in its fiscal year 2022. Its EPS is expected to grow 77% in the next year. Also, SOFI’s EPS is expected to grow at 47% per annum over the next five years.

Profitability

COIN’s $5.92 billion trailing-12-month revenue is significantly higher than SOFI’s $867.87 million. COIN is also more profitable, with a 49.97% net income margin, compared to SOFI’s negative value.

Furthermore, COIN’s 91.35% ROE  compares with SOFI’s negative value.

Valuation

In terms of trailing-12-month P/S, COIN is currently trading at 6.35x, which is 16.9% higher than SOFI’s 5.43x. And  COIN’s 10.59x trailing-12-month P/B ratio is 267.7% higher than SOFI’s 2.88x.

So, SOFI is relatively affordable here.

POWR Ratings

COIN has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. In contrast, SOFI has an overall D rating, which translates to a Sell. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

COIN has a B grade for Quality. This is justified given COIN's 0.53% trailing-12-month asset turnover ratio, which is 151.3% higher than the 0.21% industry average. On the other hand, SOFI has a Quality grade of D, which is in sync with its 0.11% trailing-12-month asset turnover ratio, which is 48.5% lower than the 0.21% industry average.

Furthermore, COIN has a B grade for Sentiment, which is consistent with analysts’ expectations that its EPS will remain positive in the coming months. In contrast,  SOFI has a D grade for Sentiment, which is consistent with analysts’ expectations that its EPS will remain negative in the near term.

Of the 169 stocks in the Software - Application industry, COIN is ranked #61. However, SOFI is ranked #127 out of 132 stocks in the Financial Services (Enterprise) industry.

Beyond what I have stated above, we have also rated the stocks for Stability, Growth, Value, and Momentum. Click here to view all the COIN ratings. Also, get all the SOFI ratings here.

The Winner

With increasing technological advances in the crypto space and growing interest in digital collectibles, crypto trading platforms should grow. While COIN is relatively better positioned here and could gain in the long run, we think neither  of the stocks are good bets now.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Software - Application industry here. Also, click here to access all the top-rated stocks in the Financial Services (Enterprise) industry.

Click here  to check out our Cryptocurrency Industry Report for 2021

COIN shares were trading at $287.34 per share on Tuesday afternoon, up $24.10 (+9.16%). Year-to-date, COIN has declined -12.47%, versus a 26.44% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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