Benzinga - Cathie Wood-led hedge fund Ark Invest has bet big on two cryptocurrency-focused stocks across its portfolio and one of these stocks has returned the firm banger returns.
Wood’s Portfolio: Both Coinbase Inc. (NASDAQ:COIN) and Block Inc. (NYSE:SQ) are among the top holdings in Ark’s flagship ETF, the Ark Innovation ETF (NYSE:ARKK) alongside the ARK Next Generation Internet ETF (NYSE:ARKW) and the ARK Fintech Innovation ETF (NYSE:ARKF).
Coinbase stake accounts for 8.8% weight in ARKK ETF, next only to Tesla’s 8.9%, with the latest market valuation of $545 million.
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Block accounts for 5.16% of the fund at a valuation of $319.4 million. Via ARKW, Wood holds about $106 million worth of COIN and $64.3 million worth of SQ.
In ARKF, Coinbase is the top holding with a 10.86% weight and $84.1 million valuation and Block is the fourth largest holding with a 7.09% share and $54.9 million valuation.
How COIN Vs. SQ Returns Compare This Year: While both Coinbase and Square are significantly down from their 2021 all-time highs, there is one stock that is returning Wood handsome returns with a recovery this year.
Coinbase Vs. Square price trajectories since the start of the year. Chart: Neer Varshney/Benzinga
A $1000 investment in Square at the start of the year would have slumped to $701.58, according to Benzinga calculations, while the same investment in Coinbase would have fetched a whopping 144.2% returns, fetching $2442.56.
Coinbase vs Square. How a $1000 investment at the start of the year would have transformed. Chart: Neer Varshney / Benzinga
While Coinbase is seen as more of a pure crypto play, Bitcoin (CRYPTO: BTC) bull Jack Dorsey-led Square is a wider fintech player that is increasing betting on crypto.
COIN Vs. SQ Correlation: The two stocks, despite having a common ground in the sector in which they function, have not been moving in tandem this year. The price actions of Coinbase and Square relation have a coefficient of determination (R2) of 0.00249, implying extremely low co-relation.
Linear Regression Analysis for Coinbase Vs. Square. Chart: Neer Varshney / Benzinga
Coinbase In Review: It is not just Square that Coinbase is outperforming this year, the crypto exchange is doing significantly better than the major indices this year, including the S&P 500 and the tech-heavy Nasdaq.
$1000 in S&P 500 have grown to $1,110.75 while in Nasdaq to $1,265.03 compared to Coinbase’s return of $2,442.56.
Coinbase investment growth compared to major indices. Chart: Neer Varshney / Benzinga.
Coinbase last reported earnings for the quarter ending June for revenue of $707.9 million, 10% above analyst estimates and a diluted EPS of -$0.42 against an estimated loss of $1.36 per share, according to data from Benzinga Pro.
Coinbase Relative Strength Index since the year’s beginning. Chart: Neer Varshney / Benzinga
The crypto company is next set to report its earnings next week on Nov. 2. Analysts are expecting it to report a loss per share of 53 cents with a revenue of $654 million, Benzinga Pro data shows.
Photo via Ark Invest.
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