The co-founder of Ark Invest, Cathie Wood, demonstrated her assertiveness in the investment world by actively trading on the final day of January. She bolstered her positions in eight existing portfolios while reducing her holdings in just three stocks. Among her notable purchases on that day were shares of Amazon, Robinhood Markets, and Coinbase, despite these stocks experiencing declines.
### Amazon
As the second-largest company set to report earnings this week, Amazon has garnered attention for its fourth-quarter results, which are expected to be revealed on Thursday afternoon. The e-commerce giant projects net sales between $206 billion and $213 billion for the last quarter of 2023, indicating a growth of 10% to 13% compared to the prior year. However, the outlook for operating profit is more variable, ranging from a decline of 1% to an increase of 23%, with a target of $21 billion to $26 billion.
While Amazon doesn’t provide bottom-line guidance, analysts anticipate a 5% increase in earnings per share, bringing it to approximately $1.95. Despite facing weaker growth rates in recent years, the company has managed to stay competitive, largely due to the performance of Amazon Web Services (AWS), which contributes significantly to its net operating income.
Despite being relatively flat over the past year, Wood’s investment in Amazon just days before its quarterly update signals her optimism about the company’s potential performance.
### Robinhood Markets
Moving into Robinhood Markets, the firm initially rose to fame for offering commission-free stock trading. However, a substantial portion of its revenue—78%—now comes from options and cryptocurrency transactions. Unfortunately for Robinhood, the cryptocurrency market has faced considerable volatility, with Bitcoin experiencing a sharp decline of about 40% since hitting its peak in October. This downturn has raised questions about the viability of investing in Robinhood during a period of uncertainty in the crypto market.
In an attempt to diversify its offerings, Robinhood has been expanding its services, recently announcing plans to branch into tax filings and estate planning. Additionally, the platform has announced a partnership to develop futures and predictive markets. Despite these efforts, the poor performance of cryptocurrencies weighs heavily on Robinhood’s stock.
### Coinbase
Coinbase, primarily focused on crypto trading, faces even graver challenges given its reliance on digital currencies. Since October, when Bitcoin reached its peak, Coinbase’s stock has been halved. The platform is set to report its latest earnings next Thursday and is bracing for a predicted earnings per share drop of 78%, alongside an 18% decrease in revenue for the fourth quarter.
While Coinbase has fewer avenues to diversify compared to Robinhood, its streamlined focus may position it favorably for recovery once the cryptocurrency market stabilizes. Investors remain cautious but hopeful for a rebound in digital currencies, especially as cryptocurrencies have historically seen cycles of sharp declines followed by recoveries.
In summary, Wood’s recent stock acquisitions highlight her proactive approach in navigating a turbulent market, particularly within the e-commerce, fintech, and cryptocurrency sectors. These strategic investments suggest her belief in the potential recovery of these companies, especially as they adapt to the evolving landscape.
