We recently compiled a list of the ARK Invest Stock Portfolio: Top 10 Stock Picks for 2024. In this article, we are going to take a look at where Coinbase Global, Inc. (NASDAQ:COIN) stands against ARK Invest’s top stock picks for 2024.
ARK Investment Management LLC, more commonly known as ARK Invest, is an American investment management firm headquartered in St. Petersburg, Florida, that oversees several actively managed ETFs. It was registered in 2014 by Catherine Wood, who is known for making big bets on disruptive technology like self-driving carse and genomics. The investment fund has around $6.7 billion in assets under management.
READ ALSO: Cathie Wood’s 11 Favorite AI Stocks and Jim Cramer November Portfolio: Top 10 Stocks.
Wood’s flagship fund has faced pressures for the third straight year, with outflows at nearly $1.8 billion during the first six months of 2024, which was close to triple the outflows seen in 2023. Its closing price of $57.85 on November 11 was down 60% from the highs of early 2021. In a letter posted to investors in July, she acknowledged that the fund’s performance was challenged by certain stock picks and the overall macroeconomic environment, but added that ‘our conviction in and commitment to investing in disruptive innovation have not wavered’.
The ARK Invest CEO argued that the fund’s holdings were set to benefit once the Fed rate cuts begin and that she anticipates another period of strong returns, reminiscent of the gains witnessed during the initial days of the pandemic. In August this year, in the hope of buying the dip, Wood piled into several tech stocks whose shares had tumbled in the months prior. Since the announcement of interest rate cuts in September, ARK’s flagship ETF has grown 25%, with a major upward spike in the week running up to and following the presidential elections, which Donald Trump won on November 5.
In a post-election message released to investors, Wood likened the country’s current economic situation to the Reagan era in the early 1980s, when the interest rate and tax cuts resulted in robust economic growth, eventually helping the United States grow out of deficit and into a surplus in the Clinton era.
Cathie Wood predicts a bright future and has stated that Trump’s policies will ‘turbocharge’ the American economy more powerfully than the Reagan Revolution did. She expects the newly elected president to slash regulations and cut tax rates, as he did during his first term.
Trump during his election campaign vowed to reduce the corporate tax rate to 15%, after having already cut the rate from 35% to 21% in his presidency between 2017 and 2021. Having said that, Wood believes that businesses will put investments on hold until the promised cuts are delivered, which means the positive anticipated impact on the economy will be delayed.
Methodology
We scanned the ARK Investment Management portfolio, as of September 30, 2024, and picked the top 10 stocks according to their stake value. The figures were sourced from the Insider Monkey Database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A shot of someone securely accepting crypto assets as payment, showcasing the company’s payment solutions.
Coinbase Global, Inc. (NASDAQ:COIN)
Stake Value as of Q3 2024: $577,484,187
Coinbase Global, Inc. (NASDAQ:COIN) is an American publicly traded company that provides a platform for users to engage in various activities with their crypto assets. It also offers crucial technology and infrastructure for the crypto economy, allowing developers to build crypto products and accept assets as payment.
The company is closely tied to the general condition of the cryptocurrency market. While the market has been volatile this year, sentiment toward the industry has improved over the last few weeks in anticipation of a Republican win in the presidential elections, with Donald Trump positioning himself as pro-bitcoin. Another positive development for the market has been the SEC approving an ETF to track the spot price of ether and bitcoin.
Bitcoin has gained over 30% since Trump’s victory in the November 5 elections and is closing in on $90,000, as investors expect a string of regulatory clearances for digital currencies under the new administration. Coinbase Global, Inc. (NASDAQ:COIN)’s shares have also surged 74% since the election, from a close of $186.27 a day before polling to $324.24 as of the close of day on November 11.
The company announced financial results for the third quarter of 2024 on October 30. Revenue was posted at $1.2 billion, with an adjusted EBITDA of $449 million. Earnings were logged at 62 cents per share, beating analysts’ estimates of $0.45 per share. The balance sheet further strengthened, growing 5% quarter-over-quarter to end Q3 with $8.2 billion in USD resources. Trading volume was down 18% compared to the previous quarter to $185 billion due to lower crypto asset volatility and average asset prices.
Coinbase Global, Inc. (NASDAQ:COIN)’s trajectory looks encouraging amid a Trump win. Wall Street analysts remain bullish on the stock and have a consensus BUY rating. It is among the top picks from the ARK Invest stock portfolio, representing 5.28% of ARK’s holdings.
Overall COIN ranks 3rd among the ARK Invest’s top Stock Picks for 2024. While we acknowledge the potential of COIN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than COIN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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