Coinbase’s ROIC/WACC ratio of 0.70 indicates it is not generating returns above its cost of capital, suggesting a lack of value creation for shareholders.
Comparatively, companies like Roblox Corporation (NYSE:RBLX) and Palantir Technologies Inc. (NYSE:PLTR) also show negative value creation with their ROIC below their WACC.
Robinhood Markets, Inc. (NASDAQ:HOOD) and Airbnb, Inc. (NASDAQ:ABNB) are exceptions, generating returns that exceed their cost of capital, indicating significant value creation for shareholders.
Coinbase Global, Inc. (NASDAQ:COIN) is a leading cryptocurrency exchange platform that allows users to buy, sell, and store various digital currencies. As a major player in the cryptocurrency market, Coinbase competes with other financial technology companies like Robinhood Markets, Inc. (NASDAQ:HOOD) and Block, Inc. (NYSE:SQ), which also offer digital currency services.
In evaluating Coinbase’s financial performance, its Return on Invested Capital (ROIC) is 13.57%, while its Weighted Average Cost of Capital (WACC) is 19.27%. This results in a ROIC/WACC ratio of 0.70, indicating that Coinbase is not currently generating returns that exceed its cost of capital. This suggests that the company may not be creating value for its shareholders at this time.
Comparatively, Roblox Corporation (NYSE:RBLX) has a negative ROIC of -30.41% against a WACC of 11.48%, resulting in a ROIC/WACC ratio of -2.65. This indicates a substantial destruction of value, as the company is not covering its cost of capital. Similarly, Palantir Technologies Inc. (NYSE:PLTR) and Block, Inc. (NYSE:SQ) also have ROICs below their WACCs, with ratios of 0.32 and 0.27, respectively, suggesting they are not creating shareholder value.
On the other hand, Airbnb, Inc. (NASDAQ:ABNB) and Robinhood Markets, Inc. (NASDAQ:HOOD) are generating returns above their cost of capital. Airbnb’s ROIC of 11.81% exceeds its WACC of 9.72%, resulting in a ROIC/WACC ratio of 1.21. Robinhood stands out with a ROIC of 17.33% and a WACC of 11.69%, leading to the highest ROIC/WACC ratio of 1.48 among the peers, indicating significant value creation.
