Apple Inc. (AAPL)vs Coinbase Global, Inc. (COIN)

Quick verdict

This is the most lopsided comparison on the site. Apple scores 4.5 on our six-factor framework and Coinbase 1.5, with Apple taking growth, quality, the balance sheet and income while Coinbase takes only valuation. Coinbase reported a net margin of -17.85% and an operating margin of -0.43% over the trailing period, meaning it lost money at both lines, and its shares fell 54.6% over the past year. Apple earned a 27.62% net margin and returned 31.11%. The two are not comparable as businesses in their current state, and the useful question is not which is better but whether Coinbase's 90.9% historical drawdown is a risk you are being paid enough to take.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Coinbase operates a cryptocurrency exchange, classified under Financial Data and Stock Exchanges within Financial Services; Apple sells consumer hardware within Technology. Coinbase's 79.01% gross margin is the highest of any company Apple is compared with on this site, far above Apple's 48.65%, because exchange transactions cost almost nothing to process once the platform exists. That advantage disappears entirely below the gross line: its operating margin is -0.43% against Apple's 33.17%, meaning fixed operating costs consumed the whole of a very high gross profit. The defining figure is beta: 3.36 against Apple's 1.09. Coinbase has historically moved more than three times as violently as the market, which is the mathematical signature of a business whose revenue tracks crypto trading volumes.

Valuation

Our framework awards valuation to Coinbase, but the multiples require heavy qualification. Its price-to-earnings of -40.24 reflects losses and cannot be compared with Apple's 34.92. On the ratios that still function, Coinbase trades at 7.08 times sales against Apple's 9.63 and 2.99 times book against 41.81. Price-to-book is the more informative of the two for an exchange, and 2.99 times is a modest premium to stated capital. Coinbase's free-cash-flow yield of 6.79% is more than double Apple's 3.04%, which is genuinely notable given the accounting losses, and suggests the reported net loss includes significant non-cash charges. That is the strongest single argument in Coinbase's favour on this page.

Growth profile

Apple takes the growth factor despite growing revenue at only 6.43% a year, because Coinbase's 9.4% revenue growth has come alongside a 53.45% annual decline in earnings per share. Growing the top line while earnings fall sharply usually indicates either margin compression or rising fixed costs, and Coinbase's operating margin of -0.43% points to the latter. Apple compounded EPS at 22.59% over the same three years. For a business whose revenue depends on trading volumes in a volatile asset class, a three-year growth figure is also less predictive than it would be for a company with recurring revenue, so we would weight Coinbase's 9.4% lightly in either direction.

Profitability and quality

Apple wins this factor decisively, though the more accurate description is that Coinbase was not profitable during the period. Apple posted a 33.17% operating margin, a 27.62% net margin, a 51.87% return on invested capital and a 137.18% return on equity. Coinbase posted -0.43%, -17.85%, -0.09% and -6.89% respectively. A negative return on invested capital means the business consumed rather than created value on an accounting basis over the period. The contrast with Coinbase's 79.01% gross margin is the point worth taking away: the underlying transaction economics are excellent, but the cost base built on top of them was not covered by revenue at the volumes seen during this period.

Balance-sheet risk

Apple has the safer balance sheet, though Coinbase's position is less precarious than its income statement implies. Coinbase's current ratio of 1.54 actually exceeds Apple's 1.00, giving it better near-term liquidity coverage. Where it falls behind is leverage and coverage: net debt sits at 3.27 times EBITDA against Apple's 0.27, and interest cover is negative at -0.26 times, which follows arithmetically from an operating loss. Negative interest cover means operating profit did not cover interest costs at all during the period. For a business with revenue as variable as Coinbase's, that combination leaves materially less room to absorb a prolonged downturn in trading activity than Apple's balance sheet does.

Price performance and shareholder returns

Apple has been the better holding by a very wide margin recently. It returned 31.11% over the past year while Coinbase lost 54.6%, and gained 12.89% year to date while Coinbase fell 37.23%. Over three years the picture inverts: Coinbase annualised 20.74% against Apple's 19.74%, a reminder of how much the starting point matters for a volatile asset. The risk figures are the ones to weigh. Coinbase's worst five-year drawdown was 90.9%, against Apple's 33.43%. An investor holding Coinbase through that period would have seen more than nine-tenths of the position's value disappear at the trough. Coinbase pays no dividend; Apple yields 0.35%.

Which stock fits which investor

Value investors are pointed toward Coinbase by the framework, on price-to-book of 2.99 and a 6.79% free-cash-flow yield, but should weigh that against a business that lost money at every line of the income statement. Income investors have only Apple, and only nominally at 0.35%. Growth and quality investors should prefer Apple without much deliberation. The honest framing is that this is not really a choice between two comparable investments. Apple is a mature, highly profitable business trading at a premium. Coinbase is a leveraged proxy for cryptocurrency trading activity, with a beta of 3.36 and a history of 90% drawdowns, and should be sized in a portfolio accordingly.

• Value: COIN
• Growth: AAPL
• Income: AAPL
• Quality: AAPL

Frequently asked questions

Is Apple or Coinbase the better buy right now?

Apple scores 4.5 on our six-factor framework and Coinbase 1.5, the widest gap on the site. Apple wins growth, quality, balance sheet and income; Coinbase wins only valuation. Coinbase lost money at both the operating and net lines during the trailing period.

Why does Coinbase have a negative P/E ratio?

Its price-to-earnings of -40.24 reflects a net loss over the trailing twelve months, with a net margin of -17.85%. The ratio cannot be meaningfully compared with Apple's 34.92 while earnings are negative. Price-to-book of 2.99 against Apple's 41.81 is the more usable comparison.

How volatile is Coinbase compared with Apple?

Far more volatile. Coinbase's beta is 3.36 against Apple's 1.09, meaning it has historically moved more than three times as much as the market. Its worst five-year drawdown was 90.9% against Apple's 33.43%.

Why is Coinbase's gross margin higher than Apple's?

Coinbase's 79.01% gross margin exceeds Apple's 48.65% because exchange transactions cost very little to process once the platform exists. That advantage vanishes below the gross line: its operating margin was -0.43% against Apple's 33.17%, as fixed costs consumed the entire gross profit.

Does Coinbase pay a dividend?

No. Coinbase's dividend yield is 0%. Apple pays 0.35% on a 12.13% payout ratio. Neither stock suits an income mandate, though only one of them returns any cash to shareholders.

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