Why Cathie Wood Is Doubling Down on Shopify, Meta, and Coinbase: A Closer Look at Her Latest Moves
1. Shopify: Betting Big on E-commerce Revival
Shopify’s share price has rebounded sharply this year, climbing 62% from its summer lows, with year-over-year growth finally in the green. As a widely popular e-commerce platform that helps entrepreneurs and established brands create digital storefronts, Shopify aligns with ARK’s mission of supporting companies at the forefront of technology. This commitment is apparent, as Shopify holds one of the largest combined positions across Wood’s ARK funds.
After a strong second-quarter earnings report in August, Shopify continues to show momentum. The company is expected to release its third-quarter earnings next week, and Wood’s pre-earnings purchase signals confidence in the e-commerce platform’s continued rise.
In the second quarter, Shopify reported a 21% revenue increase. While this growth is slightly slower than in past years, the company’s exit from the logistics sector—an area that’s proven costly for many—has made its core business leaner. On a comparable basis, Shopify’s revenue growth would have actually hit 24%-25%. Even better, Shopify returned to profitability in Q2 and tripled its free cash flow. Despite some volatility, analysts’ earnings projections have been consistently exceeded.
The upcoming earnings announcement, slated for November 12, has fueled high expectations for accelerated growth. Wood’s decision to strengthen her position early suggests confidence in Shopify’s ability to outperform, especially given the company’s robust performance in recent quarters.
2. Meta Platforms: Turning Short-Term Weakness Into Long-Term Opportunity
Wood’s latest purchase of Meta shares shows her willingness to take a contrarian approach. The parent company of Facebook, Instagram, and WhatsApp recently posted its third-quarter earnings. Though it beat expectations, Meta’s stock dipped on Halloween due to a warning about rising expenses.
Despite some headwinds, Meta’s reach remains colossal, with 3.29 billion daily active users across its platforms—a 5% increase over last year. The company’s revenue soared by 19%, while earnings per share jumped by an impressive 37%, almost doubling the growth rate. Meta has now achieved five consecutive quarters of sequential revenue growth, even as short-term cost concerns weigh on the stock. For Wood, the market’s skittish response to Meta’s increased spending plans may present an opportunity.
Meta’s substantial reach and innovative monetization strategies are a powerful asset, and Wood likely views the stock’s recent dip as a prime buying moment. With Meta’s forward earnings multiple of 22x, the company is delivering the kind of growth that justifies long-term optimism.
3. Coinbase: Riding the Cryptocurrency Wave
It’s been an exceptional year for crypto investors, with Bitcoin surging over 60%. Yet, Coinbase, the largest cryptocurrency trading platform in the U.S., has only seen its stock rise by 7% in 2024. Bitcoin currently represents 37% of Coinbase’s trading volume, but the platform’s range of digital assets gives it exposure to various high-performing cryptocurrencies.
For Wood, Coinbase remains a top choice to capitalize on the ongoing crypto boom. Although the stock hasn’t fully reflected the year’s crypto gains, the company’s underlying financials are solid. Last week, Coinbase reported a robust third quarter, with revenue nearly doubling. However, profitability has been a challenge, as back-to-back quarters showed a dip in adjusted net income.
Wood has always been a vocal proponent of crypto, and Coinbase fits into her broader vision of a digital future. As the crypto market stabilizes and matures, Wood’s belief in Coinbase signals her confidence that it will be a key player in mainstream crypto adoption.
