If you follow ARK Invest CEO Cathie Wood, I’ve got a treat (or two) for you. Block (NYSE:SQ) and Coinbase Global (NASDAQ:COIN) are two Wood picks that technology and blockchain stock investors ought to put on their radar right now. I am bullish on both stock SQ and COIN, so let’s delve into the details of Wood’s dip-buying strategy.
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Block was once known as Square, and the company’s apps, hardware, and other tools enable point-of-sale digital payments. The company is also heavily involved with the blockchain. Another blockchain-focused business is Coinbase, which runs a platform where people can easily buy and sell Bitcoin (BTC-USD) and some other popular cryptocurrencies.
So, here’s the scoop. Reportedly, Wood’s funds recently purchased 338,072 shares of SQ stock and 268,928 shares of COIN stock. Those are huge share positions, but here’s the real kicker: Wood bought those stocks even while they were declining by double-digits. This might seem like a reckless strategy – or just maybe, a brilliant one, so it’s a great time to examine Square and Coinbase to see why Wood might heavily favor these two companies.
The Short-Seller Report’s Impact on SQ is Likely Temporary
It looks like noted short-seller Hindenburg Research is at it again, publishing a negative report on a stock the firm is bearish on. However, if this is the primary reason SQ stock is down, this could represent a prime buying opportunity and a chance to trade like Wood.
Perhaps, Wood isn’t fazed by Hindenburg’s verbal salvo on Block. The allegations against Block are severe, as Hindenburg Research claimed that Block has “systematically taken advantage of the demographics it claims to be helping.” Fearing the worst-case scenario (i.e., regulatory action against Block), investors promptly sold SQ stock after the publication of the Hinderberg report. Block isn’t just taking it lying down, however. The company called Hindenburg Research’s claims “inaccurate and misleading,” and Block has even reportedly stated that the company will explore legal action.
Meanwhile, Block is still a consistently profitable business, and Mizuho analyst Dan Dolev has high hopes for the company. Dolev envisions Block stock rising to $93, with the “near-term bull case” based on expectations of the company “reaching better than expected profits helped by cost control.” I tend to concur with this assessment and anticipate strong upside for Block shares in 2023.
What is the Price Target for SQ Stock?
SQ has a Strong Buy consensus rating based on 22 Buys and five Hold ratings assigned in the past three months. Further, the average Block stock price target of $98.79 implies 61.55% upside potential.
SEC Notice Doesn’t Mean You Have to be Afraid of COIN Stock
It seems like some perfectly viable companies just can’t catch a break lately. Block is on the receiving end of a short report, and Coinbase is the topic of a warning from the U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy. COIN stock dropped due to the SEC’s warning, but it’s certainly not the end of the road for Coinbase and the company’s stakeholders.
Before you hastily sell COIN stock, take a look at what the SEC actually said. The regulatory agency believes that cryptocurrency asset securities can be “exceptionally volatile and speculative.” That’s certainly true, but this doesn’t mean Coinbase can’t make money from the purchases and sales of these assets. Also, the SEC observes that the platforms offering crypto asset investments or services might not be complying with applicable laws. Sure, but this doesn’t necessarily mean that Coinbase is breaking the law.
Additionally, the SEC cautioned, “Issuers of unregistered crypto asset securities offerings might not provide audited financial statements, depriving investors of this key information.” Fine, but there’s no reason to put Coinbase in this category. The SEC’s warning may pertain to sketchy issuers of questionable cryptocurrencies, but this doesn’t describe Coinbase.
In any case, there’s no denying that Coinbase is still a popular platform for traders of Bitcoin and other cryptos. Wood is probably thinking long-term with her share purchase of COIN stock. So, if you’re a blockchain and cryptocurrency enthusiast, you might choose to stay long and strong with Coinbase.
What is the Price Target for COIN Stock?
COIN stock has a Hold consensus rating based on eight Buys, eight Holds, and seven Sell ratings assigned in the past three months. The average Coinbase stock price target of $61.63 implies 8.6% downside potential.
Conclusion: Should You Consider SQ Stock and COIN Stock?
It’s up to you whether you want to trade like Wood and buy the dips in Block stock and Coinbase stock. There are reasons to be afraid of these two stocks, but those reasons don’t seem so severe that sensible investors should cut and run.
I feel that these two companies are still viable and can grow in the coming years. When all is said and done, you don’t have to succumb to fear and worry. As far as I’m concerned, Wood’s trades are well-timed, and it’s definitely a good time to consider SQ stock and COIN stock.
