Cathie Wood Just Bought More Coinbase (COIN) Stock. Here’s Why.

Shares of Coinbase (NASDAQ:COIN) are in the spotlight after Cathie Wood’s Ark Invest reported buying COIN stock through two of its exchange-traded funds (ETFs). Shares of the cryptocurrency brokerage are down more than 55% year-to-date. In addition, Coinbase has lost about 65% of its value since its anticipated initial public offering (IPO).

The Coinbase (COIN stock) logo on a smartphone screen with a BTC token.
Source: Primakov / Shutterstock.com

On Wednesday, the company opened up its beta non-fungible token (NFT) marketplace to all users. However, Bloomberg reports that the marketplace is off to a slow start. On the same day, Coinbase recorded fewer than 100 transactions as of 5:15 p.m. Eastern, which equates to less than $60,000 in sales. In comparison, the leading NFT marketplace, OpenSea, reported $124 million in transaction volume on May 3.

Despite the slow start to Coinbase’s NFT marketplace, Cathie Wood remains bullish on the brokerage.

Cathie Wood Buys COIN Stock

On May 5, two Ark ETFs reported buying shares of Coinbase. The Ark Next Generation Internet ETF (NYSEMKT:ARKW) reported purchasing 39,698 shares. Meanwhile, the Ark Fintech Innovation ETF (NYSEMKT:ARKF) reported buying 23,341 shares. After the purchase, Coinbase accounts for 9.24% of ARKF, making it the ETF’s third-largest position. Furthermore, Coinbase accounts for 8.08% of ARKW, making it the third-largest position as well. Across all Ark ETFs, the company is the fourth-largest holding with a 4.51% allocation.

Excluding yesterday’s purchase, the last time Ark Invest purchased COIN was on April 20. On that day, two Ark ETFs purchased 167,810 shares in total. Since Jan. 6, Ark Invest has not sold a single share of COIN.

Many people believe that cryptocurrency is still in its early stages, and Wood seems to think that as well. With a market capitalization of about $23 billion, the company currently trades at a low price-to-sales ratio of 3.1.

Coinbase to Report Earnings on May 10

Coinbase has confirmed it will report Q1 earnings on May 10 after the market close. For revenue, analysts are expecting $1.48 billion, which would reflect a year-over-year decline of 18%. Meanwhile, analysts are expecting earnings per share (EPS) of 17 cents. For Q2 guidance, analysts expect revenue of $1.58 billion and EPS of 16 cents.

However, Zacks Equity Research reports that increased competition may hamper operating income due to marketing, account verification and payment-processing expenses. As a result, investors should keep their eyes peeled for when Coinbase reports earnings.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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