JPMorgan: Coinbase and Robinhood Shareholders Face Significant Stock Dilution

"Coinbase and Robinhood, like their tech-company peers, issue substantial equity to company employees allowing companies to both attract and incentivize employees while keeping cash compensation lower," JPMorgan equity research analyst Kenneth Worthington said in a note to clients. Given the sharp drop in share prices, JPMorgan expects Coinbase and Robinhood to lower employee equity grants via RSUs, though it still expects "share creep from RSU issuance will drive dilution to a still substantial 7% pace annually in coming years". The bank estimates if that 7% pace were to persist for five straight years, it could reduce the value of each company to existing shareholders by 30%.