Ark Invest, led by Kathy Wood, bought a total of 546,579 shares of Coinbase for $2.9 million on Wednesday.
The acquired shares were split into three actively managed exchange-traded funds from Ark Innovation (ARKK), Next Generation Internet (ARKW) and Fintech Innovation (ARKF).
On Tuesday, May 10, America’s largest cryptocurrency exchange, Coinbase, reported first-quarter financial results, posting quarterly losses of $430 million and declines in several other key indicators.
Coinbase shares dropped from $73 to $62 at the close of trading on Tuesday, and then dropped 26 percent to $53.72 at the close of trading on Wednesday.
It’s worth noting that Coinbase’s financial results report came amid a general “bloodbath” in the cryptocurrency market caused by the Terra UST stabilitycoin crash.
Coinbase went public through a direct listing on the Nasdaq exchange in April 2021, with shares initially selling for $381.
On Wednesday, Coinbase CEO Brian Armstrong was quoted on Twitter by famed venture capitalist Fred Wilson as saying that “markets are irrational in the short term, but not in the long term” and that they sometimes “offer reduced prices for the world’s greatest companies.”
Armstrong thus made it clear that Coinbase stock at around $50 could be seen as a bargain, and Ark Invest seems to have taken his hint.
Meanwhile, Wood, who is often praised for her stock picking skills, compared the current state of the breakout tech industry to the dot-com crash of the 2000s, saying that “stocks were sold out after the tech/telecom bubble because the dream won’t become a reality for 20-25 years.”
Wood believes that “genomic sequencing, adaptive robotics, energy storage, artificial intelligence and blockchain technology are real, and stocks in these sectors appear to be in value territory.”
Whether Ark Invest’s bet on Coinbase stock will pay off, however, remains to be seen.
Thanks to the strength of its portfolio in the form of companies like Zoom Video Communications Inc. and Teladoc Health, whose stocks rose significantly during the pandemic, the ARK Innovation ETF has outperformed all other actively managed U.S. funds in 2020.
However, as of the end of April 2022, the ARK Innovation ETF had fallen 50% since the beginning of the year and was down nearly 8% more on Wednesday. The Next Generation Internet and Fintech Innovation ETFs have lost 46% and 48%, respectively, since the beginning of the year.