It's been a rough few days for Ark Investment Management (ADNPX) CEO Cathie Wood. Tuesday, March 21 began with the investor defending what some see as a lackluster performance from her innovative ETF funds, telling CNBC that the Federal Reserve's sharp increase in interest rates threw a wrench into the company's investment strategy.
In the same interview, Wood expressed excitement about a tech company she believed would disrupt a currently-uncertain banking industry -- Block Inc (SQ). Her firm has been scooping up shares of the payment processing service left and right.
But on Thursday, March 23, noted short-seller Hindenburg Research accused Block Inc. of overinflating data about its user base and hosting fraudulent transactions. Once the accusation broke, Block's stock price fell as much as 22%.
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Block
"The 'magic' behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics," Hindenburg said.
At nearly the same time, another top company for Ark Invest took a major hit to its stock price -- and possibly more. Cryptocurrency exchange platform Coinbase saw a 20% drop in stock price after announcing that the company had received a warning notice from the Securities and Exchange Commission (SEC) about a potential violation.
At the moment, Coinbase makes up 7.5% of ARKK’s holdings. Block Inc. makes up 6.2%, according to data compiled by Bloomberg.
