Cathie Wood's Ark Invest Is Buying Coinbase Stock Hand Over Fist. Should Crypto Investors Be Doing the Same?
Key Points
Cathie Wood of Ark Invest recently purchased $8 million worth of Coinbase stock after a quarterly earnings miss.
While Coinbase may have missed its earnings target, its top-line revenue numbers continue to hint at future growth ahead.
Based on these future growth prospects, Coinbase looks like a potential "buy the dip" candidate.
- 10 stocks we like better than Coinbase Global ›
In crypto investing, a popular strategy is to buy the dip. And that's exactly what Cathie Wood of Ark Invest did in early August. As soon as shares of Coinbase Global (NASDAQ: COIN) dipped nearly 15% on lower-than-expected Q2 earnings, her funds swooped in and bought $8 million worth of Coinbase stock.
Right now, Coinbase has a 4.2% weighting in Ark Invest's flagship fund, the Ark Innovation ETF (NYSEMKT: ARKK), making it the fund's sixth-largest holding. So Cathie Wood obviously has a lot of conviction about where Coinbase is headed next.
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Should crypto investors follow her lead, or is Coinbase still too risky for your portfolio? How you answer that question really depends on how you interpret Coinbase's most recent quarterly earnings.
Coinbase's mixed financial results
Coinbase delivered higher revenue across several new product segments, including prediction markets. It also posted its highest-ever market share of the global crypto trading market.
Cathie Wood, CEO of Ark Investment Management. Image source: Getty Images.
However, Coinbase missed its projected earnings estimate. And that's what has Wall Street investors concerned. The crypto market remains deeply mired in bear market territory, and crypto trading has largely dried up.
Yes, revenue is growing in other areas, but Coinbase is still highly susceptible to the cyclical nature of the crypto market. That's why Cathie Wood was able to snap up Coinbase at a bargain price.
Potential catalysts for Coinbase
Several important catalysts could catapult Coinbase higher over the next 12 to 24 months. First, Coinbase is now much more than just a crypto exchange. It is actively involved in building the back-end infrastructure for the crypto market. This should help to reduce its historical reliance on trading in top cryptocurrencies such as Bitcoin.
As part of its new "Everything Exchange" strategy, Coinbase is also getting involved in some of the fastest-growing segments of trading, including prediction markets and tokenized equities.
One area that stands out in particular is the growth of agentic AI in finance. Loosely speaking, this refers to AI agents doing the trading in the future, not humans. As a result, Coinbase continues to tout its new AI agent initiatives, including those featuring stablecoins.
On top of all that, new crypto legislation is on the horizon. The one piece of legislation that could give COIN stock a jolt is the new Digital Asset Market Clarity Act (Clarity Act), which was supposed to be signed into law this summer. The Clarity Act has now been delayed but still has a chance of passing later this year.
The upside potential for Coinbase
Overall, I'm impressed with Coinbase's new "Everything Exchange" strategy. The company is still a top crypto exchange, of course, but it's also a crypto infrastructure play and a potential bet on the future of agentic AI finance. For that reason, it could be worth taking a second look at Coinbase at its current discounted prices.
Should you buy stock in Coinbase Global right now?
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
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