Two leading fintech giants, Coinbase Global, Inc. (COIN) and Robinhood Markets, Inc. (HOOD), are major investments in Cathie Wood’s investment portfolio, highlighted by her flagship ARK Innovation ETF (ARKK), along with the ARK Fintech Innovation ETF (ARKF) and the ARK Next Generation Internet ETF (ARKW), underscoring Wood’s strong belief in their potential to drive future financial and technological advancements.
Cathie Wood Stock #1: Coinbase Global
Founded in 2012, Delaware-based Coinbase Global, Inc. (COIN) is at the forefront of the cryptocurrency revolution, providing essential financial technology and infrastructure both in the U.S. and globally. As a primary gateway to the crypto economy, Coinbase offers consumers a trusted financial account and provides institutions with a robust marketplace with sufficient liquidity to trade crypto assets.
In addition to this, the company empowers developers with technology and services to build innovative cryptocurrency products and accept digital payments securely. Valued at $38.9 billion by market cap, the cryptocurrency exchange giant’s stock has surged a remarkable 95% over the past year, easily outperforming the S&P 500 ($SPX) index’s return of approximately 23.8% over this period.
In terms of valuation, COIN shares are trading at 34.43 times forward earnings and 11.78 times sales, reflecting expectations of above-average returns.
The cryptocurrency exchange company revealed its Q2 earnings results on August 1, with adjusted EBITDA of $596 million, marking the sixth consecutive quarter of positive adjusted EBITDA. Total revenue for the quarter amounted to approximately $1.5 billion, marking a solid 104.8% year-over-year increase and beating estimates by nearly 6.2%.
Subscription and services revenue was $599 million, up 78.6% from the year-ago quarter. While earnings of $0.14 per share missed estimates, they marked a dramatic turnaround from last year’s loss of $0.42 per share.
For Q3, management anticipates subscription and services revenue to be in the range of $530 million to $600 million. Transaction expenses are expected to be in the mid-range as a percentage of net revenue.
Additionally, sales and marketing expenses are projected to rise to $160 million-$210 million, driven by expanded digital marketing efforts. For the full fiscal year, analysts following Coinbase project the company’s bottom line to hit $4.28 per share in 2024, representing a staggering 422% year-over-year increase.
Coinbase also cited progress toward greater regulatory clarity during Q2, as the company’s “Stand With Crypto” campaign mobilized more than 1.3 million advocates to help elect pro-crypto candidates.
Indeed, a key driver behind Barclays’ optimism towards Coinbase is the improving regulatory environment around cryptocurrencies, with the firm pointing to the approval of Bitcoin (BTCUSD) and Ethereum (ETHUSD) ETFs as signs of mainstream adoption.
Overall, Wall Street is bullish, with a “Moderate Buy” consensus rating on COIN stock. Of the 21 analysts offering recommendations, eight advise a “Strong Buy,” one advocates a “Moderate Buy,” 11 suggest a “Hold,” and one recommends a “Strong Sell.”
Cathie Wood Stock #2: Robinhood Markets
California-based Robinhood Markets, Inc. (HOOD) revolutionized the online brokerage business upon its inception in 2013, challenging much larger rivals with its low- and zero-commission model. Robinhood allows users to invest in stocks, ETFs, options, gold, and cryptocurrencies with features like fractional trading, margin investing, and instant withdrawals, and also offers premium services like Robinhood Gold and retirement investing.
With a market cap of around $17.3 billion, the trading platform’s stock has outperformed the SPX over the past year, with gains of about 90.4%. In 2024 alone, HOOD stock is up 62%, eclipsing the SPX’s 16.4% gain so far this year.
From a valuation standpoint, HOOD shares are trading at 24.86 times forward earnings and 8.98 times sales, roughly in line with electronic exchange operator Nasdaq (NDAQ).
The fintech jewel
Following HOOD’s Q2 earnings results that beat Wall Street expectations, the stock rose more than 3% on August 8. Total net income of $682 million was up 40% from a year ago and beat estimates by 6.1%. Q2 earnings of $0.21 per share improved significantly from $0.03 in the year-ago quarter and comfortably beat Wall Street’s forecast of $0.15 per share.
The brokerage platform signed a deal in June to acquire Bitstamp, a leading cryptocurrency exchange with over 50 international licenses, serving clients in the EU, UK, US and Asia.
Most recently, Robinhood announced in July the acquisition of Pluto Capital, an artificial intelligence (AI)-powered investment research platform. These strategic moves position Robinhood for a stronger presence in the cryptocurrency and AI investment sectors.
For fiscal 2024, the company’s spending plan focuses on growth investments in new products, features and international expansion, while also seeking to improve efficiency in existing operations. The outlook for full-year total operating expenses is in a range of $1.85 billion to $1.95 billion.
Analysts who follow Robinhood expect the company to swing to a profit of $0.76 per share in fiscal 2024, reversing last year’s loss of $0.61.
As for Barclays, analyst Budish predicts that HOOD will see “likely future growth… from new products (e.g. futures, credit card), geographic expansion (e.g. UK brokerage, crypto in EU) and potential new channels (e.g. institutional via pending Bitstamp acquisition).”
HOOD stock has a “Moderate Buy” consensus rating overall, up from an average view of “Hold” two months ago. Of the 17 analysts covering the stock, eight suggest a “Strong Buy,” eight recommend a “Hold,” and one has a “Strong Sell” rating.
The average analyst price target of $22.28 indicates a 10.6% upside potential from current price levels. The Street’s highest price target of $32 represents a 55% premium.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
