American asset management company Ark Invest has sold its holdings of fintech giant PayPal and backed Bitcoin-friendly Cash App.
It comes after Cathie Wood, CEO of Ark Invest, revealed her preference for Block’s (formerly Square’s) Cash app over PayPal’s Venmo at the Bitcoin 2022 North American Conference in Miami.
Backing Cash App
Wood believes Cash App has embraced an organic growth structure in contrast to Venmo’s “top-down” and frantic approach to Bitcoin and highlighted Block’s wider focus on the digital asset via the layer 2 Lighting network.
While speaking to CNBC correspondent Kate Rooney about choosing Block over PayPay, the Bitcoin bull expressed confidence in the long-term growth of Cash App and said:
“We tend to put our bets on who we believe will be the winners. As we consolidated our portfolios during a risk-off period, we chose Block over PayPal.”
Betting on Bitcoin and innovation
Many of Cathie Wood’s Ark Invest funds have crashed amid the tech stock crash, with investors mostly turning away from high-growth stocks.
The company rushed out to shred most of its exposure in Paypal Holdings at the beginning of February after the fintech giant ditched an ambitious growth strategy it put in place last year. In addition to that, Ark Invest also sold shares of several household names and, in turn, poured money into more innovative niches.
Commenting on Block’s performance throughout the past year, the asset management firm noted earlier,
“Block’s solid performance assuaged analysts’ concerns that, in the absence of Covid-19 government stimulus, the momentum in Cash App, Block’s consumer-focused digital wallet, would slow down considerably.
Block’s management also noted continued strong momentum in January and February, citing 21% growth in Cash App’s gross profit on a year-over-year and 73% [on a] two-year-annualized basic.”
For context, Cash App experienced rapidly accelerated revenue generation after introducing Bitcoin trading on its app, which then accounted for 76% of its revenue in 2020. The following year, Cash App managed to turn a profit net of $2.03 billion.
It generated $12.3 billion in revenue, 81% of that came from Bitcoin. Naturally, its trajectory is mostly tied to the primary cryptocurrency. Hence, the long-term prospects appear bullish to Wood, who opined that the asset is poised to reach $1 million in the next few years.
