Cathie Wood is a well-known investor and the founder, CIO, and CEO of the investment management firm ARK Invest. Wood’s ARK Invest ETFs, including the flagship ARK Innovation ETF (ARKK), ARK Genomic Revolution ETF (ARKG), and ARK Fintech Innovation ETF (ARKF), have tumbled significantly this year amid the intense market rout since they are overweight on high-growth companies.
Concerns over multi-decade-high inflation, the Fed’s persistent hawkish stance, and a potential recession have triggered a widespread tech sell-off this year. Wood’s flagship ARKK has plummeted nearly 60% in price year-to-date. However, the fund staged a dramatic relief rally last Thursday due to an easing inflation reading. The ETF posted its biggest daily pop since its inception in 2014, climbing more than 14%.
Despite inflation cooling more than expected in October, it is still way above the Fed’s 2% target. Fed Governor Christopher Waller said, “we’ve still got ways to go” before the central bank stops raising interest rates, despite favorable news last week on consumer prices.
Coinbase Global, Inc. (COIN)
COIN is a fintech company that provides end-to-end financial infrastructure and technology for the global crypto economy. The company offers financial accounts for retail crypto users, a liquid marketplace to institutions for crypto transactions, and technology and services for ecosystem partners. The stock has nearly 3.94% ARK ownership.
Last week, crypto prices collapsed as investors feared FTX’s solvency, and the customer funds have been transferred to an asset-trading firm, Alameda Research. The FTX collapse sent Bitcoin and altcoin prices to multi-year lows. Bitcoin plummeted below $16,000 for the first time in two years within a week of the FTX collapse. The recent crypto crash is expected to hurt companies like COIN.
In the fiscal 2022 third quarter ended September 30, 2022, COIN’s net revenue decreased 53.3% year-over-year to $576.40 million. Its operating expenses grew 12.4% from the year-ago value to $1.15 billion.
The company reported an operating loss of $556.48 million, compared to an income of $291.81 million in the prior-year period. Its adjusted EBITDA loss came in at $115.89 million versus an income of $618.22 million a year ago.
In addition, COIN’s net loss attributable to common shareholders came in at $544.64 million and $2.43 per share, compared to a net income of $405.34 million and $1.62 per share in the prior-year quarter, respectively.
In terms of its forward EV/Sales, COIN is trading at 3.68x, 26.6% higher than the industry average of 2.91x. The stock’s forward Price/Sales multiple of 3.70 is 31.7% higher than the industry average of 2.88.
Analysts expect COIN’s revenue for the fiscal year ending December 2022 to decline 59.4% year-over-year to $3.18 billion. The company’s loss per share for the current year is expected to come in at $5.53, compared to EPS of $17.10 in the previous year. Furthermore, the company has failed to surpass the consensus revenue estimates in three of the trailing four quarters.
The stock has plunged 78.8% year-to-date to close the last trading session at $53.22.
COIN’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
COIN has a grade of F for Growth, Stability, and Sentiment and a D for Value, Momentum, and Quality.
It is ranked last among 142 stocks in the F-rated Software – Application industry.
Rocket Lab USA, Inc. (RKLB)
RKLB is a space company that provides launch services and space system solutions for the defense and space industries. The company’s offerings include spacecraft engineering and design services, spacecraft components, and designing and manufacturing small- and medium-class rockets. RKLB has about 0.56% ARK ownership.
For the fiscal 2022 third quarter ended September 30, 2022, RKLB’s operating loss came in at $32 million, while its loss before income taxes stood at $32.92 million. Also, the company reported a net loss and loss per share attributable to RKLB of $34.61 million and $0.07, respectively.
Furthermore, as of September 30, 2022, the company’s cash and cash equivalents were $333.28 million, compared to $690.96 million as of December 31, 2021.
In terms of its forward EV/Sales, RKLB is currently trading at 10.85x, 539.4% higher than the industry average of 1.70x. Its forward Price/Sales multiple of 11.46 is 786.1% higher than the industry average of 1.29.
Analysts expect the company’s loss per share for fiscal 2022 and 2023 to come in at $0.23 and $0.19, respectively. Shares of RKLB have plummeted 57.7% year-to-date and 63.9% over the past year to close the last trading session at $5.16.
RKLB’s POWR Ratings reflect its poor outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
RKLB has a grade of F for Value, Stability, and Quality. The stock has a D grade for Growth and Sentiment. In the 74-stock Air/Defense Services industry, it is ranked last.
Beyond what is stated above, we have also rated RKLB for Momentum. Click here to see RKLB’s Momentum grade.
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COIN shares were trading at $56.42 per share on Tuesday morning, up $3.20 (+6.01%). Year-to-date, COIN has declined -77.64%, versus a -14.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...
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