Cathie Wood Keeps Buying Coinbase (COIN) Stock. Here’s Why.

  • Coinbase (NASDAQ:COIN) plunged lower after reporting Q1 earnings
  • The crypto exchange reported that revenue declined by 27% year-over-year (YOY)
  • Yesterday, Ark Invest purchased 91,868 shares of COIN stock
A close-up of the Coinbase (COIN) app install option.
Source: sdx15 / Shutterstock.com

Shares of Coinbase (NASDAQ:COIN) have plummeted by more than 70% since 2022 kicked off. The cryptocurrency brokerage reported its Q1 earnings this month, and investors were clearly disappointed. Revenue clocked in at $1.17 billion, down 27% year-over-year and missing analyst consensus estimates of $1.48 billion. Meanwhile, retail monthly transaction users declined to 9.2 million, down from 11.4 million during Q4. It appears that as the cryptocurrency market falls, less users are willing to trade cryptos.

However, the lackluster earnings weren’t enough to scare away Cathie Wood’s Ark Invest. Since Coinbase reported earnings on May 10, Ark has purchased COIN stock on six separate occasions. Let’s get into the details.

Cathie Woods Keeps Buying COIN Stock

Yesterday, the Ark Fintech Innovation (NYSEMKT:ARKF) exchange-traded fund (ETF) purchased 34,631 shares of COIN. On top of that, the Ark Next Generation Internet ETF (NYSEMKT:ARKW) disclosed purchasing 57,237 shares. After the purchases, Coinbase accounts for 6.46% of ARKW and 7.57% of ARKF. The company is a major holding among all Ark ETFs with a 3.32% allocation, making it the ninth-largest position. In total, the firm owns 7.83 million shares.

The success of Coinbase likely correlates with the success of cryptocurrency. Accordingly, Wood’s bet on Coinbase can be seen as a bet on the longevity of crypto. Since its initial public offering (IPO), shares of COIN have declined by more than 80%. That doesn’t mean that the stock can’t fall more, but an 80% decline is severe for any company. Furthermore, Coinbase’s price-to-sales ratio is currently at a 2x multiple, which is the lowest it has ever been.

Coinbase’s management is confident in itself as well. During its earnings call, the company stated, “We believe these market conditions are not permanent and we remain focused on the long-term.”

Coinbase Becomes the First Crypto Fortune 500 Company

Fortune recently added Coinbase to the Fortune 500 list, making it the first crypto company ever to be placed on the list. The Fortune 500 ranks companies based on annual revenue, and Coinbase came in at no. 437. During 2021, the crypto brokerage reported revenue of $7.8 billion, while the cutoff for the list was $6.4 billion.

The inclusion in the Fortune 500 does not fundamentally affect Coinbase. However, it is a stamp of approval that shows that the company is one of the highest earners in the country.

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.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.


Article printed from InvestorPlace Media, https://investorplace.com/2022/05/cathie-wood-keeps-buying-coinbase-coin-stock-heres-why/.

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