Why Did ARK Invest Sell $150M Coinbase (COIN) Shares in a Week?

ARK Invest, the investment management firm led by Cathie Wood, recently divested 580,000 Coinbase (COIN) shares.

The transaction, valued at $149.85 million based on Friday’s closing price, underscores the company’s strategic investment decisions.

Second-Largest Offload Since 2023

This sale represents ARK’s second-largest weekly offload of COIN shares since July 2023. The previous record was set during the week ending February 16, when ARK sold shares worth $151 million.

ARK’s commitment to maintaining a balanced portfolio drove the decision to sell. As part of its strategy, ARK aims to prevent any individual holding from exceeding a 10% weighting of an ETF’s total value. Large sell-offs become necessary when an asset experiences rapid appreciation, such as the recent surge in Bitcoin’s price.

Despite the substantial sale, COIN’s weighting across ARK’s three ETFs – Innovation ETF (ARKK), Next Generation Internet ETF (ARKW), and Fintech Innovation ETF (ARKF) – remains comfortably above the 10% threshold. Investors can expect further sales from ARK, especially after Bitcoin recently hit a new all-time high above $72,000.

Coinbase Shares Soar Over 80% Amid Crypto Rally

Meanwhile, Coinbase shares have been on an upward trajectory, gaining over 80% in value in the past month alone. This surge is closely tied to the nearly 50% rally in Bitcoin’s price during the same period. Coinbase (COIN) also experienced a surge following its fourth-quarter earnings report, where it exceeded analysts’ expectations and showcased its strong performance amidst the crypto rally.

Based on a Q4 report released last month, the company exceeded expectations in terms of earnings and revenue. According to FactSet data, earnings stood at $1.04 per share, surpassing the average analyst estimate of $0.02 per share. Revenue reached $953.8 million, surpassing the analyst forecast of $826.1 million. This strong performance resulted in a 13% surge in COIN shares during post-market trading, adding to a 3% gain in the regular session.

Alongside beating earnings estimates, Coinbase posted a 2023 adjusted EBITDA of $964 million and anticipates generating $410 million to $480 million in subscription and service revenue in the first quarter of 2024. The company’s ETFs have also invigorated the sector, leading to increased activity and engagement on the platform.