Ark Invest Sells, Coinbase Stock Holds: What’s Happening?

adminJanuary 6, 2024

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Ark Invest, led by the acclaimed Cathie Wood, recently made notable changes to its investment strategy, including selling an additional 26,743 shares of Coinbase Global Inc. The deal, valued at approximately $4.1 million, took place on Thursday following a significant investment. The day before, $25.3 million worth of Coinbase stock was sold. This selling pattern highlights strategic alignment within Ark Invest’s portfolio, especially in the context of the company’s ARK Innovation ETF (ARKK), known for its dynamic and forward-looking investment approach.

This also hints at the possibility of a major correction for Bitcoin, despite the feverish enthusiasm that has captured the hearts of retail investors due to the recent ETF hype. In the end, the smart money is usually on the right side of the deal.

ARKK has been actively participating in the market, not only selling Coinbase shares but also acquiring new stakes in other companies. Notably, on the day of the recent Coinbase sale, the ETF invested in 132,955 shares of Recursion Pharmaceuticals, a transaction worth approximately $1.48 million. The move is part of a broader trend for Ark Invest’s ETF, which has collectively sold more than $200 million worth of Coinbase stock in recent weeks. These significant sales highlight Ark Invest’s active management style and willingness to adjust its holdings in response to market dynamics and internal investment strategies.

Coinbase and ARKK win big

Coinbase’s impressive rally, with its stock price surging more than 130% in the last three months of 2023, has had a significant impact on Coinbase’s representation in ARKK’s portfolio. The surge pushed Coinbase’s weight in the ETF past its target maximum threshold of 10%. Despite the recent sale, Coinbase still holds a significant portion of ARKK’s investments, holding a 10.34% stake worth more than $872.5 million.

Coinbase’s stock price rise, which closed 2.21% higher at $155.6 on Thursday, reflects a broader trend of growth of more than 360% over the past year. This growth trajectory has been influenced by a number of factors, including the company’s decision to align with UK regulatory guidelines requiring users to complete a risk acceptance form. These compliance measures are part of Coinbase’s broader strategy to maintain a safe, reliable and compliant platform for cryptocurrency trading, as emphasized by CEO Brian Armstrong.

In addition to Coinbase, Ark Invest has invested a significant portion of its portfolio (over 15%) in Coinbase Global and UiPath. Ark Invest visionary Cathie Wood is recognized for her unconventional approach to asset management focused on long-term capital appreciation through investments in disruptive technology companies. Ark’s portfolio, which consists of six thematic index funds, focuses on investments in fields such as automation, blockchain, fintech, and robotics, making a collective investment of $16.5 billion across 122 companies. The prominence of Coinbase Global and UiPath in Ark’s portfolio highlights the company’s confidence in the continued growth and innovation potential of these companies.

What will change in Bitcoin in 2024? Has its use expanded? Infrastructure improvements? Spot Bitcoin ETF? In the new Bitcoin brainstorming, @Bitcoin Park_‘S @bitkiteARK’s @CathieDWood and @yassineARK, leaders in the Bitcoin space discuss all this and more. listen! https://t.co/vwdr5HdtaM
— ARK Invest (@ARKInvest) January 5, 2024

Ark’s flagship ETF, the Ark Innovation ETF, has been incredibly successful since its launch in 2014, outperforming the S&P 500 by about 20 percentage points. This success is especially noteworthy considering that the fund is currently trading 67% below its peak valuation. These achievements demonstrate Ark’s investment strategy, which focuses on identifying and leveraging emerging technologies and market trends.

Coinbase Global: 10.34% of Ark portfolio

Coinbase, the cornerstone of Ark’s portfolio, offers a variety of services including cryptocurrency exchange and wallet services. This will allow both retail and institutional investors to participate in trading, staking and storage of various cryptocurrency assets and interact with decentralized applications on various blockchains. The company’s revenue stream primarily consists of transaction fees and interest earned on USDC reserves through its agreement with stablecoin issuer Circle. This revenue model ensures that Coinbase’s business is closely tied to market sentiment and interest rate movements.

Under Armstrong’s leadership, Coinbase prioritized strategic growth with a focus on trust and reputation. This approach has made Coinbase the most popular cryptocurrency exchange in the United States and the largest by trading volume. The company’s third quarter financial results were solid, with revenue up 14% to $674 million, driven by a balanced mix of transactional revenue and subscription services. Growth in subscription and services revenue, particularly interest income on USDC reserves, was the key growth driver. During this time, Coinbase also made significant strides in international expansion, entering new markets such as Canada and registering as a cryptocurrency exchange with the Bank of Spain, expanding its global market opportunities.

UiPath: 6.4% of Ark portfolio

UiPath, another important holding in Ark’s portfolio, specializes in business automation software that blends robotic process automation and artificial intelligence. The company’s platform focuses on analyzing tasks and processes for automation potential, building software robots for automation, and managing these robots throughout business operations. UiPath’s third quarter financial performance was strong, with revenue increasing 24% to $326 million and non-GAAP net income increasing significantly. Demand for RPA and AI solutions is expected to drive significant market growth, and UiPath is positioned to capitalize on this trend through innovative AI products such as Autopilot, a generative AI assistant.

Are you following the smart money path?

Ark Invest’s recent portfolio adjustments, particularly its sale of Coinbase shares and acquisitions of stakes in companies such as Recursion Pharmaceuticals and UiPath, reflect its strategic approach to investment management. Ark Invest, led by Cathie Wood, continues to focus on long-term capital appreciation through investments in disruptive technologies. The company’s trust in companies like Coinbase and UiPath, as evidenced by its significant portfolio allocations, indicates a strong belief in the potential of these companies to drive innovation and growth in their sectors.