Buying the Dip: Cathie Wood’s Ark Invest Purchases $30M in Coinbase Stock

Ark Invest, the investment house led by Cathie Wood, bought a total of 546,579 shares of Coinbase on Wednesday, worth roughly $30 million, according to the firm’s daily trade information newsletter.

The purchase is spread out across the company’s three actively managed exchange-traded funds: Ark Innovation (ARKK), Next Generation Internet (ARKW), and Fintech Innovation (ARKF).

Coinbase, America’s largest cryptocurrency exchange, released its Q1 earnings report on Tuesday, posting a quarterly loss of $430 million and missing on several other key metrics.

Following the report's publication, Coinbase’s stock plunged from $73 to $62 in after-hours trading on Tuesday, with the rout continuing with a 26% drop to as low as $53.72 at the closing bell on Wednesday.

Coinbase's earnings report also came amid a wider bloodbath across the crypto market, caused by the collapse of Terra's UST stablecoin.

Coinbase went public on the Nasdaq exchange through a direct listing in April 2021, with the company’s stock initially selling at $381.

'Fire sale prices'

On Wednesday, Coinbase CEO Brian Armstrong took to Twitter to quote the well-known venture capitalist Fred Wilson, saying that "markets are irrational in the short term but not over the long term,” and that sometimes they “offer fire-sale prices on the greatest companies in the world."

This way, Armstrong made it clear that Coinbase’s stock at around $50 could be seen as a bargain, with Ark Invest seemingly taking the hint.

Meanwhile Wood, who is often praised for her stock-picking skills, compared the current state of disruptive technologies with the collapse of the dot-com industry in the 2000s, saying that “stocks sold off after the tech/telecom bubble because the "dream" would not become reality for 20-25 years.”

On the contrary, Wood reckons that “genomic sequencing, adaptive robotics, energy storage, AI, and blockchain technology are realities, their stocks seemingly in deep value territory.”

Whether Ark Invest’s bet on Coinbase stock will pay off remains to be seen, though.

Per a Reuters report, thanks to the strength of its portfolio of companies such as Zoom Video Communications Inc and Teladoc Health that rallied during the pandemic, ARK Innovation ETF outperformed all other actively managed U.S. equities in 2020.

However, as of the end of April 2022, Wood's ARK Innovation ETF was down 50% year to date, falling nearly an additional 8% on Wednesday. Next Generation Internet and Fintech Innovation are down 46% and 48% year to date, respectively.