Cathie Wood’s ARK Invest sold shares of Coinbase for the first time in over a month. According to recent filings, ARK dumped $34.3 million worth of Coinbase stock across three different funds on Tuesday February 14th.
This is the first time ARK has sold shares of the cryptocurrency exchange since January 11th. Since ARK’s previous sale, Coinbase’s stock price has climbed 19% amid a crypto resurgence.
Key Takeaways
- ARK Invest sold $34.3 million of Coinbase shares, the first sale in a month.
- The sale was executed from ARK’s Fintech Innovation, Innovation, and Next Generation Internet ETFs.
- Coinbase’s stock price has risen 19% since ARK’s previous sale.
- The sale comes ahead of Coinbase’s upcoming earnings report after market close.
- Increased crypto trading volume is expected to boost Coinbase’s earnings.
Details of ARK’s Coinbase Sale
ARK executed its Coinbase sale ahead of the company’s fourth quarter earnings, which will be reported after U.S. markets close on Thursday February 16th. Here are more details on ARK’s transactions:
- 30,009 Coinbase shares sold from ARK’s Fintech Innovation ETF (ARKF)
- 152,600 shares sold from the Innovation ETF (ARKK)
- 31,459 shares sold from the Next Generation Internet ETF (ARKW)
The combined value of the 214,068 Coinbase shares sold on Tuesday was $34.3 million, based on Coinbase’s closing price of $160.38.
Coinbase Stock Performance
Coinbase’s stock has rebounded significantly since ARK Invest’s last sale on January 11th. Here’s how Coinbase’s share price has performed:
- Closing price on Jan 11 (ARK’s last sale): $134.24 per share
- Closing price on Feb 14 (ARK’s latest sale): $160.38 per share
- Increase: 19%
Meanwhile, the tech-heavy Nasdaq Composite index gained 5.9% over the same one-month period.
Coinbase has benefited from a resurgence in crypto trading activity so far in 2023. Increased volume is expected to drive stronger revenue and earnings for the fourth quarter. For example, Robinhood reported a 10% increase in crypto transaction revenue in its recent earnings release.
Why Did ARK Sell Coinbase?
It’s not entirely clear why ARK chose this moment to sell Coinbase stock. As a long-term investor, ARK typically only sells positions to raise cash for other opportunities.
One possibility is that ARK believes Coinbase’s valuation is stretched at current levels ahead of earnings. Despite the recent bounce, Coinbase’s stock price remains 68% below its all-time high.
ARK may be taking some profits off the table ahead of the earnings report in case of a negative reaction. Even with strong fundamentals, Coinbase’s stock tends to be volatile around earnings events.
What to Expect from Coinbase’s Earnings
As mentioned, Coinbase is scheduled to release Q4 and full year 2022 earnings after the stock market closes on Thursday February 16th.
Here are some key items that analysts and investors will be watching closely:
- Trading volume – Higher crypto trading activity should boost transaction revenue.
- Monthly transacting users – An important metric of consumer engagement.
- Assets on platform – Total crypto assets held on Coinbase.
- Subscription & services revenue – Recurring revenue streams beyond trading fees.
- Expenses – Will rising costs eat into earnings?
- Guidance – Management’s outlook given crypto market uncertainty.
If Coinbase delivers strong results, the stock could resume its rally. On the other hand, any signs of weakness have potential to send the share price lower again. Volatility around earnings makes it a risky time to hold Coinbase stock.
Conclusion
ARK Invest’s sale of $34 million in Coinbase stock comes after a one-month break from selling. While surprising ahead of earnings, the move may suggest ARK believes Coinbase’s valuation is stretched following the recent bounce.
Coinbase’s stock has gained 19% since ARK’s last sale, fueled by recovering crypto trading activity. But the upcoming Q4 report marks a critical test – will fundamentals justify the recent run-up? With the potential for big swings, ARK may be wisely reducing exposure ahead of time.
