The digital payments business Block (SQ) is now more heavily owned by Cathie Wood's Ark Investment Management, which is noted for its emphasis on disruptive and innovative technology.
The Ark Innovation ETF (ARKK), the fund manager's flagship exchange-traded fund, purchased 50,858 shares in Block, based on trading desk announcements made on Friday. The Ark Next Generation Internet ETF (ARKW), meanwhile, purchased 8,064 shares.
Based on Friday's closing price of about $74 for Block, these acquisitions cost almost $4.3 million. This is the fourth day in the past week that Ark has increased its holdings in Block; over the previous three days, the asset management purchased Block stock for around $29 million.
Ark Investment Management's decision is being made at a time when Block's stock has been declining recently due to worries about the company's development prospects and rising competition in the digital payments market. But Cathie Wood has long backed Block because she sees it as an important player in the world of electronic payments.
Her Investment Approach Reflects Block
Ark Innovation ETF and Ark Next Generation Internet ETF hold a sizable fraction of the company's outstanding shares, reflecting Wood's belief in Block and her investment approach. At the time of writing, the two funds jointly owned 11.1 million shares in Block, valued at almost $800 million.
Investors' worries have also been reduced by Ark Investment Management's continuous investment in Block, which led to a little increase in the stock price on Friday after-hours trading following the announcement of the purchases.
In recent years, Block, which runs the well-known mobile payment app Cash App, has experienced substantial growth as more people switch to digital payments in the wake of the COVID-19 pandemic. Yet, the business is up against fierce competition from established players like PayPal and Venmo as well as fresh players like Facebook's Libra and China's digital yuan.
Notwithstanding these obstacles, Cathie Wood and Ark Investment Management are still optimistic about the future of Block, and their recent purchases indicate that they view the current stock price decline as a purchasing opportunity. Investors will, as always, be keenly watching Wood and Ark's actions in the upcoming weeks and months to see if their belief in Block pays off.