ARK Acquires $12.1M In Coinbase Shares Despite Volatile Markets
Shortly after FTX’s liquidity concerns were discovered, Ark Investments increased its Coinbase holdings. Coinbase had previously said that it had “minimal exposure” to the unstable trading platform.
In the midst of the FTX and crypto market volatility, Cathie Wood’s Ark Investments acquired 237,675 Coinbase (COIN) shares for around $12.1 million on November 9.
Ark Investment Management added 207,527 COIN shares to its ARK Innovation ETF (ARKK), 22,416 shares to its ARK Next Generation Internet ETF (ARKW), and 7,732 shares to its ARK Fintech Innovation ETF, for a total of 237,675 COIN shares (ARKF).
Coinbase claimed in reaction to FTX’s liquidity problem that it had “minimal exposure” to the suddenly cash-strapped cryptocurrency trading platform, with just $15 million on deposit to “enable company operations and client transactions.” This prompted the tech-focused investment firm to acquire FTX.
Coinbase said that it had no exposure to FTX’s native token FTT, which has declined by 84.08 percent after Binance announced its plan to sell its entire FTT holdings late on November 7 — and its trading partner Alameda Research.
Wood’s acquisition on November 9 followed a 10.84% decline in COIN’s share price on November 8, which was a predictable consequence of the FTX scandal, according to Owen Lau, a stock analyst at the investment banking company Oppenheimer.
While COIN has low exposure to FTX, until there is sufficient proof that the danger of contagion has been addressed, the pressure on cryptocurrency prices will likely impact on COIN.
It was also the investment firm’s first transaction for Coinbase since July 26, 2022, when it sold approximately 1.4 million COIN shares worth $75 million across ARKK, ARKF, and ARKW.
In reaction to the U.S. Securities and Exchange Commission’s (SEC) investigation into charges that Coinbase engaged in insider trading of unregistered securities, there was a significant decline in the company’s share price.
However, Wood’s most recent purchasing binge has reduced the company’s COIN share count back up to 7.625 million, which is around one million shares fewer than its all-time high of 8.675 million on July 20, 2022, according to Cathie’s Ark data.
Coinbase currently has the eleventh biggest stake in Ark’s primary investment fund ARKK, which accounts for 3.79 percent of the portfolio. According to Yahoo Finance, COIN’s stock rose 10.74% on Thursday, boosting its share price to $50.92.
Coinbase announced the elimination of 60 staff on November 10.
“Today’s actions were surgical. We are just making sure we are not wasting a dollar,” said Coinbase CFOAlesia Haas, according to a Nov. 10 report from Bloomberg.
“If we see that there is going to be further depressed revenue, and if we believe this is going to impact beyond the scenarios we have already planned for, we will have to take further cost-saving action.”
