Cathie Wood’s Ark Invest Boosts Coinbase, Circle, and Robinhood Holdings
Ark Invest, the firm helmed by renowned investor Cathie Wood, made significant moves on Monday, increasing its stakes in Coinbase, Circle, and Robinhood while trimming its position in the crypto exchange Bullish. The combined purchases amounted to approximately $6.6 million, with the sale of Bullish shares totaling around $2.3 million. Market observers interpret these actions as a strategic move to accumulate assets at a lower price point ahead of the earnings season.
Ark Invest’s Latest Trades
On Monday, November 2nd, Ark Invest disclosed its latest trading activities, which included adding to its holdings in Coinbase, Circle, and Robinhood, all prominent companies within the cryptocurrency ecosystem. Concurrently, the firm reduced its stake in the crypto exchange Bullish.
According to the daily transaction details released by Ark Invest, the firm acquired 24,790 shares of Coinbase (COIN) through its actively managed ETFs ARKK, ARKW, and ARKF. Valued at approximately $3.4 million based on the day’s closing price, Coinbase shares ended Monday at $137.83, marking a 3.98% decline. In the same trading session, Ark Invest purchased 35,657 shares of Circle (CRCL), valued at around $2.6 million. Circle saw a slight dip of 0.63% on the day. Additionally, the firm added 7,703 shares of Robinhood (HOOD), worth approximately $645,800, as the stock closed down 1.35%. The total value of these three purchases reached about $6.6 million.
Conversely, Ark Invest divested 104,172 shares of Bullish (BLSH), a transaction valued at approximately $2.3 million. At its closing price of $22.54 on Monday, Bullish experienced a significant single-day drop of 5.69%, making it the most substantial decliner among the crypto-related stocks in this trading batch. The purchases of three companies coincided with their weakening performance, while the one stock sold saw the steepest decline.
Timing Amidst Earnings Season
The timing of Ark Invest’s latest acquisitions comes shortly after Coinbase released its third-quarter earnings report.
Coinbase’s third-quarter filing with the U.S. Securities and Exchange Commission (SEC) revealed a substantial year-over-year increase in net profit, jumping 66% to $719 million from $433 million in the same period last year. Total revenue for the quarter stood at $1.22 billion, largely flat compared to the previous quarter but down 35% year-over-year. Notably, its prediction markets business achieved an annualized revenue exceeding $200 million for the first time, doubling from approximately $100 million in the prior quarter, positioning it as one of the fastest-growing product lines.
Following the earnings release, Bernstein analysts highlighted that Coinbase’s growth in prediction markets and its subscription and services revenue streams “offset weaker crypto trading activity.”
Circle is scheduled to report its third-quarter earnings on November 4th. According to analyst estimates compiled by TradingView, the market consensus anticipates quarterly revenue of $788 million and earnings per share of $0.37. Robinhood, which reported earlier, saw its crypto-related revenue increase by 20% to $120 million from the previous quarter, compensating for a decline in crypto trading revenue. Bullish is expected to announce its third-quarter results on November 18th.
Strategic Shift in Focus
Viewing these transactions within the broader context of the year, Ark Invest has consistently bought into crypto-related stocks during periods of pullback. This latest move is no exception. However, a key distinction this time is the shift in focus: while selling shares in Bullish, an exchange operator, Ark Invest has increased its holdings in companies that lean towards “crypto infrastructure and brokerage services.” These companies generally have more diversified revenue streams and are less reliant on a single cryptocurrency price.
In prior actions, Ark Invest had reduced its stake in Circle when its stock price surged after its listing, only to repurchase shares during the recent downturn. This pattern suggests that Ark Invest’s medium-to-long-term valuation of Circle remains unchanged, with the adjustments primarily reflecting entry price points.
Key Observations Moving Forward
Several factors will be crucial to monitor in the coming days:
First, Circle’s earnings report on Wednesday will serve as an immediate test. Whether the market consensus of $788 million in revenue is met will directly determine if Ark Invest’s recent purchase represents a true low or a mid-level entry.
Second, the ability of these crypto-related stocks to stabilize after this earnings week will be significant. This is particularly true for Coinbase, which recently faced a downgrade from Morgan Stanley with a price target cut by over 50%. Its capacity to hold recent lows will serve as a barometer for market sentiment.
Third, if Ark Invest’s rotation from exchange stocks to brokerage and infrastructure companies continues, it could signal an institutional shift in crypto industry exposure, moving from transaction fees towards more stable revenue structures. This potential pivot could also offer valuable insights for other publicly traded fintech and brokerage firms.
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