ARK Buys the Dip, Adding $13.4M in Coinbase and Robinhood Shares

ARK Invest injected a total of $13.4 million into Coinbase and Robinhood stocks this week, a new emailed trade notification showed. The purchases come amid a new dip in US stocks after US central bank chairman Jerome Powell warned of potentially larger rate increases.

US Stocks in Red After Powell’s Comments

Cathie Wood’s ARK Invest added to its stakes in Coinbase and Robinhood on Tuesday, buying more than $13.4 million worth of the companies’ shares. According to an emailed trade notification, Ark Innovation ETF purchased 47,568 shares in Coinbase for $3.44 million. Further, the Ark Next Generation Internet ETF bought 8,031 and 1.06 million shares in Coinbase and Robinhood, respectively, for a total of $9.97 million.

The move came amid the latest US stock market sell-off triggered by Federal Reserve Chair Jerome Powell’s comments that interest rates may have to keep rising for a while longer. Powell’s warnings raised concerns among investors that the US central bank could switch back to largest rate hikes at its next policy meeting after delivering two 25 basis points (bps) increases this year.

During his latest testimony on Capitol Hill, Fed Chair Powell said,

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

Shares of Coinbase closed the Tuesday session down 1.40% at $61.89, while Robinhood stock fell over 3% to $9.42 per share. Broader stock market indexes including the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite were all in red, sliding 1.72%, 1.53%, and 1.25% on the day, respectively. Meanwhile, the 2-year Treasury yield rose to 5%, its highest level since 2007.

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ARK Continues its Aggressive Coinbase Stock Purchases

ARK’s latest investments come just several weeks after the investment manager bought $13.2 million worth of Coinbase stock. The firm’s exchange-traded funds (ETFs) have been increasing their stake in the crypto exchange at a rapid pace, investing $30 million in February alone.

After a challenging 2022, Coinbase saw a bullish start to 2023 and has recently reported better-than-expected earnings per share (EPS) and revenue figures for Q4. Despite the latest drop, the company’s shares are up more than 84% year-to-date. Part of this is likely due to the launch of its ‘Base’, a layer-2 blockchain scalability solution as part of Coinbase’s foray in decentralized finance.

Last week, the crypto exchange acquired digital asset manager ORDAM for an undisclosed amount. The purchase marked another effort by Coinbase to boost crypto adoption among institutional investors.

Robinhood remains a popular means of stock and options trading among younger retail investors due to its user-friendly interface. Yet the stock app has faced difficulty as well, as the firm continues to lose revenue due to a 39% decrease in crypto trading volume in Q4 2022.

Do you think we could see another stock market bear run if the Fed transitions to larger rate hikes? Let us know in the comments below.