The firm is rooted in over 40 years of experience in investing in technologies that aim to deliver outsized growth as industries transform. What did Ark Invest buy this week? For full disclosures, please go to our Terms & Conditions page. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on ARK's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. New York, NY 10016 Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Certain of the statements contained on this website may be statements of future expectations and other forward-looking statements that are based on ARK's current views and assumptions, and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The content is for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation in respect to any products or services for any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. 2020, ARK Investment Management LLC. We delineate other potential growth catalysts in the last section of this piece. The Company specializes in thematic investing and focuses on key areas of disruptive innovation, including genomics, industrial transformation, and the next generation of web development. Square Crypto Unveils the Lightning Developer Kit See Section #2 and #3 Follow @CathiesArk Cathie's Ark is not affiliated with Ark Invest or Cathie Wood Quotes are delayed 15 minutes Graphs, numbers, and charts should only be taken as approximations. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. What did Ark Invest buy this week? But traditional car makers are catching up. The consumption of financial services today is highly fragmented, as 55% of consumers have relationships with two or more financial services providers. The investment fund assumes Tesla’s largest revenue driver in 2024 will be robotaxis. [8] Before launching officially in Europe, however, Cash App probably will use Verse, a P2P payment startup Square acquired earlier this year to increase its understanding of European markets. Invest in ARK's Innovation ETFs – Exchange Traded Funds, designed to aim for attractive performance, uncorrelated to traditional investment strategies. That said, Square still has large opportunities in its existing international markets: Canada, Japan, UK and Australia. At some point, Square could integrate Square Online Store with Cash App, enabling Cash App users to search for and purchase Square seller products, much like Shopify’s Shop application. Dorsey had planned to spend time in Africa this year before COVID-19 derailed the opportunity. Follow @CathiesArk Cathie's Ark is not affiliated with Ark Invest or Cathie WoodQuotes are … ©2020. Square also could lend the bitcoin on its balance sheet, an opportunity that we will discuss in a forthcoming blog. You may not use the material for commercial purposes without first obtaining written permission. Another week in the books and another week of Cathie Wood and Co. publishing their daily trades. ARK's statements are not an endorsement of any company or a recommendation to buy,sell, or hold any security. In emerging markets, Cash App could leverage bitcoin, as explained below. The five actively managed ETFs provided by ARK cover innovation, autonomous technology and … ARK-Invest-Square-Valuation-Extract. Likewise, Square Capital originations should double from 2% of GPV to 4%. A big reason the ARK Fintech Innovation ETF (NYSE: ARKF) is higher by 71.32% this year is the growth of digital wallets, such as PayPal's (NASDAQ: PYPL) Venmo and Square… This methodical approach seems likely to pay dividends, especially in Europe, during the next five years. ARK Invest is a private investment start-up and founded on the principle of Open Source Research. According to Ark Invest’s chief executive, the Bitcoin ecosystem has not seen the end of institutional investors. Ark Invest’s Cathie Wood Says Big Tech Firms Exploring Bitcoin Ark Invest founder and CEO Cathie Wood says she is expecting a new wave of institutional investors to put Bitcoin on their balance sheets. In the future, we anticipate that Cash App will offer a range of services comparable to that of traditional banks today, including personal loans, credit cards, mortgages and insurance. Wood predicted that a new wave of institutional investors was on the way. Square does not monetize the remaining 60% of Cash App’s MAUs. Work fast with our official CLI. To foster healthy debate, we have published an extract of our Square valuation model. Note that ‘Active Digital Accounts’ might not include all of a bank’s retail customers and therefore increase the average revenue per account. Square’s projected price target depends importantly on the three groups of Cash App monetization. Metcalfe’s law states that the utility of a communications networks scales proportionally to the square of the number of nodes. The Adviser did not pay any fee to the grantor of the awards for the right to promote the Adviser's receipt of the awards nor was the Adviser required to be a member of an organization to be eligible for the awards. If Cash App can monetize 20% of its US user base at the level of traditional banks today, then with modest growth in its seller business, SQ could return 19% at an annual rate during the next five years, rising from $150 today to $375 per share in 2025. As described in our previous white paper, Cash App’s P2P payments network lowers customer acquisition costs and increases retention rates. Today, ARK identifies five major innovation platforms evolving at the same time and transforming industries. ARK Investment Management LLC Info: Size ($ in 1000's) At 09/30/2020: $16,861,030 At 06/30/2020: $9,297,482 ARK Investment Management LLC holdings changes, total fund size, and other information presented on HoldingsChannel.com was derived from ARK Investment Management LLC 13F filings. 12/18 Here’s a rundown of Ark Invest’s buys for the past week, and what it’s doing with its Slack shares. In an episode of ARK Invest’s In the Know series, Cathie Wood says she is … Already, aiming to serve as their primary spending hub, Cash App has incentivized consumers to sign up for direct deposit with significant “Boost” discounts on goods and services as well as lower interest rates on loans. ©2021, ARK Investment Management LLC (“ARK” ® ”ARK Invest”). Today, Cash App offers users banking services such as direct deposit, debit cards, ATM access, a platform to invest in equities and bitcoin, a rewards program, free transfers from the US to the UK, and integration with Square sellers. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. In our view, Cash App offers users the most cost-effective and streamlined products and services in the financial services industry as it builds personal relationships that lead to efficient and effective cross-selling. If nothing happens, download the GitHub extension for Visual Studio and try again. View Ark Invest SQUARE - Google Docs.pdf from ECN 135 at University of California, Davis. download the GitHub extension for Visual Studio, https://ark-invest.com/analyst-research/square-valuation, https://ark-invest.com/wp-content/trades/ARK_Trades.pdf. Further, there is no assurance that any strategies, methods, sectors, or any investment programs herein were or will prove to be profitable, or that any investment recommendations or decisions we make in the future will be profitable for any investor or client. Furthermore, Square could use the Lightning Network, a second layer application on top of Bitcoin, to disintermediate third parties in transactions between and among Cash App users and Square sellers. Square’s hardware and software engage businesses at the point of sale (POS) and consumers with Cash App’s P2P network. You signed in with another tab or window. Source: ARK Investment Management LLC, 2020, On average, Wells Fargo, JP Morgan Chase and Bank of America generate roughly $880 in revenue per active digital customer per year. Read ARK’s corresponding blog with further explanation of our assumptions and thoughts on Square here: https://ark-invest.com/analyst-research/square-valuation. Square could use its seller base as an acquisition channel for new Cash App users by offering its loyalty via Cash App, enabling Square sellers to use Boost as an advertising platform, or facilitating closed-loop transactions between Cash App users and Square seller at lower cost for sellers than standard credit card processing, thus incentivizing sellers to convince more shoppers to transact via Cash App. All content is original and has been researched and produced by ARK Investment Management LLC (“ARK”) unless otherwise stated herein. Square Capital, Square’s small business lending arm, increases its originations as a percentage of gross payment volume (GPV) from 2% in 2019 to 4% in 2025. Cash App also is leveraging innovative marketing strategies to attract new customers across all demographic groups in the US. Current and Historical Performance Performance for ARK Innovation ETF on Yahoo Finance. Intentionally, we have not incorporated the potential for Square’s international business, an important call option. ARK Invest holds a 25% probability that Tesla will hit $15,000 in 2024. Feel free to change variables to battle test our assumptions and share your thoughts with us. We will welcome all questions, feedback, and constructive criticism. Square is No. Among them are the four described below. In our view, Square’s ecosystem has tremendous international growth potential, both for sellers and Cash App users. No description, website, or topics provided. ARK believes innovation will change the way the world works and lead to a more sustainable future. The information provided here is intended for educational purposes only and is not guaranteed to be accurate. Other Square seller services grow at a 19% compound annual rate, the same rate as transaction-based revenues, through 2025. Perhaps most important on the cryptoasset front, Square could build long term shareholder value through its Square Crypto initiative. Like Cash App’s network effects on the consumer side of the equation, software services seem to have increased seller retention as measured by Square’s positive gross profit retention for cohorts measured quarterly and annually since 2012. In our view, it is the most durable metric for a bank’s customer base as it is reported by the bank itself and 85.5% of the US population accessed the internet in 2020. An ARK Invest spokesperson wouldn’t elaborate, but Ms. Wood told an interviewer last month that she expects to nearly triple … Using the average $880 annual ARPU generated by traditional banks as a benchmark for Cash App, we could be overestimating the cross-selling capabilities of banks and underestimating those of Cash App. DISCLAIMER: This web site and its author are in no way affiliated with ARK Invest or Trading 212. Today, Square pays fees, including those for interchange, assessment, processing, and bank settlement, to various third parties. Please remember that there are inherent risks involved with investing in the markets, and your investments may be worth more or less than your initial investment upon redemption. In our view, because customers have diversified their relationships among financial institutions, the $880 in bank ARPU discussed above is a fraction of the potential value creation in consumer financial services. Forecasts are inherently limited and cannot be relied upon. Published 30/9/2020. Intentionally, we have not incorporated the potential for Square’s international business, an important call option. In our view, meeting the three challenges mentioned above, Cash App will increase its average revenue per user by (ARPU) 49% at a compound annual rate during the next five years, from $25 last year to $260 in 2025. 12/18 Posted on December 18, 2020 December 18, 2020 Author Michael O'Mahony Comments Off on What did Ark Invest buy this week? The projected share price changes substantially dependent on Cash App’s monetization level. The five industries that could be disrupted by innovation in the coming years. Nothing contained herein constitutes investment, legal, tax or other advice and is not to be relied on in making an investment or other decision. As a result, we believe that Square should be able to double its penetration of the US general purpose card purchase volume from 2.7% in 2019 to 5.5%, growing transaction-based revenues at a 19% annual rate during the next five years. Past performance is not indicative of future performance. We believe that Square’s (SQ) Cash App could become a leading global consumer financial services provider. Ark invest square analysis Figure 4. All content is subject to change without notice. 3 East 28th Street, 7th Floor, In 2019 and 2020, however, search activity for Cash App in other states picked up significantly, pointing to user growth in higher income demographics. The ARK Fintech Innovation ETF (NYSEARCA: ARKF) is a prime example of an ETF with a slew of tailwinds and many of those are derived from two marquee holdings: Square … Non-bank providers like Charles Schwab or Robinhood for investing, LendingClub for personal loans, and RocketMortgage for mortgages are proliferating, perhaps because consumers want to diversify their risks or because banks cannot convince users to agree to more than one product or service. We believe that the network effects associated with Cash App’s peer-to-peer (P2P) payments network have given Square a significant competitive advantage relative to traditional banks and private bank startups. We also assume that Cash App’s estimated 75 million monthly active users break down into the three groups in 2025: 20% primary, 20% secondary, and 60% unmonetized, resulting in an average ARPU of $260. For full disclosures, click here. When one of its sellers accepts a $50 payment, for example, Square charges $1.47, or 2.95%, but retains only $0.50, or 1% of the purchase value, as its net take-rate. The Adviser did not pay a fee to be considered for or granted the awards. Why invest in ARKK Focused on ARK’s belief that innovation is key to growth, the ARK Innovation ETF is built on the cornerstone investments that present the best risk-reward opportunities from ARK’s innovation-based themes. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, please go to https://ark-invest.com/wp-content/trades/ARK_Trades.pdf. Use Git or checkout with SVN using the web URL. [3] For reference, private challenger bank Chime generated $100 in revenue per direct deposit customer, per our estimates. While it has lost international sellers, we believe Square has substantial runway in the US to offer a cost effective and convenient way not only to accept payments but also to help entrepreneurs manage their businesses, especially given its newly acquired Industrial Loan Company (ILC) bank charter. Square’s Seller Business: A Superior Value Proposition. Square’s seller business continues to expand, growing transaction-based revenues at a 19% annual rate through 2025. Ten years after launching a revolutionary credit card ‘dongle’ reader, in our view Square still offers sellers the best value proposition. In an episode of ARK Invest’s In the Know series, Cathie Wood says she is witnessing a spike in institutional interest in Bitcoin. We strive to enlighten people on the impact innovation has on our lives. The convergence of seller and consumer ecosystems, Square is one of the only companies in the world with real-time front-end access to both consumers and businesses. There is no guarantee that ARK's objectives will be achieved. These companies such as Tesla, Square, and Illumina are just some of the companies form the backbone of Ark Invest’s different funds. If primary and secondary users each were to monetize at 30% instead of 20%, its price target would approach $500, delivering a 26% compound annual rate of return during the five years ended December 2025. If nothing happens, download GitHub Desktop and try again. To foster healthy debate, on Github we have published an extract of our Square valuation model with explanations at the link here. Disclosure: This work is licensed under a Creative Commons Attribution-Non-Commercial 4.0 International License. Historically, Square has focused on building proprietary technology and deep partnerships, taking time to understand markets, rather than blitz-scaling across geographies. The reason consumers cite most when deciding on a new product or service is the rate or fee, followed by simplification. As another example of companies struggling to build out front-end relationships with both consumers and businesses, JP Morgan recently shut down a payment network that attempted to link consumers and businesses directly. In the latter scenario, Square sellers would have an incentive to maximize the number of Cash App transactions and minimize the number of other card transactions, effectively becoming sales agents for Cash App. This material is for informational purposes only and does not constitute, either explicitly or implicitly, any provision of services or products by ARK. For full Award Disclosure please go to our Terms & Conditions page. All statements made regarding companies or securities or other financial information on this site or any sites relating to ARK are strictly beliefs and points of view held by ARK or the third party making such statement and are not endorsements by ARK of any company or security or recommendations by ARK to buy, sell or hold any security. In July 2020, Square began recruiting for an Italian-speaking customer support position[7] and, in September, Cash App was looking for a European Operations Manager. We describe Cash App’s innovative marketing strategies in one of our previous blogs. Moreover, as a comprehensive Digital Wallet incorporating Square’s seller ecosystem, Cash App could integrate offline and online commerce, distinguishing it from both traditional and challenger banks. A bank’s total number of FDIC insured accounts, on the other hand, has shown to be artificially inflated in some cases. Here, Edward Sheldon highlights three ARK stocks he'd buy for his portfolio today. In the chart below, we describe 10 Cash App monetization scenarios and, holding all other assumptions constant, provide our forecasts of their impact on Square’s stock price. The Lightning Network could provide an additional revenue stream for Square. No part of ARK’s original content may be reproduced in any form, or referred to in any other publication, without the express written permission of ARK. Intentionally, we have not incorporated the potential for Square’s international business, an important call option. We divide Cash App users into three groups: primary Cash App users who monetize at an $880 ARPU (average revenue per user), the same rate on average as bank customers; secondary Cash app users who monetize at half that rate, or $440; and unmonetized users who use only Cash App’s products that are free. Other Square seller services grow at a 19% compound annual rate, the same rate as transaction-based revenues, through 2025. Square does not monetize the remaining 60% of Cash App’s MAUs. I recently discovered Cathie Wood and ARK Invest and have come away very impressed with their ETFs. According to Ark Invest’s chief executive, the Bitcoin ecosystem has not seen the end of institutional investors. Moreover, to avoid unpleasant interactions months after splitting the costs after a night on the town, family and friends can lure users back to Venmo, Cash App, and other P2P platforms when requesting long delayed repayments. In previous research, we learned that a disproportionate percentage of Google searches early in Cash App’s development were in the southern US, states with high unbanked and underbanked rates. 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