ARK Invest's fourth-quarter report revealed that Coinbase was a significant detractor across its innovation-focused exchange-traded funds. This underperformance occurred even as other holdings like AMD, Shopify, and Rocket Lab demonstrated strong gains, and Coinbase continued to advance its "everything exchange" strategy.
Coinbase Global Inc. represented the largest detractor across ARK Invest’s innovation-focused exchange-traded funds during the fourth quarter, according to the firm’s quarterly report released for the period ending December 31.
Cryptocurrency Market and Coinbase's Outlook Declined in Q4
The cryptocurrency exchange's shares experienced a sharp decline during the quarter. This downturn was influenced by a 9% quarter-over-quarter drop in spot trading volumes on centralized exchanges. The period followed an October 10 liquidation event that led to the elimination of $21 billion in leveraged positions across the cryptocurrency sector, according to market data.
Coinbase hosted a product event during the quarter that highlighted strategic initiatives. These included plans for on-chain equities, prediction markets, and an AI-powered portfolio advisor.
Roblox Corp. also emerged as a notable detractor. While the company reported third-quarter bookings growth of 51% year-over-year, it projected declining operating margins in 2026 due to increased infrastructure and safety costs. Russia's ban on Roblox, citing child safety concerns, removed approximately 8% of the platform’s total daily active users. However, the region accounted for less than 1% of total revenue, according to the company.
Key Contributors and Strategic Developments
Advanced Micro Devices Inc. (AMD) was the quarter's strongest performer. This success was driven by announcements of AI partnerships, including a multiyear agreement with OpenAI and a collaboration with Oracle Corp. for a public AI supercluster. AMD's third-quarter earnings showed 36% year-over-year revenue growth, primarily fueled by demand in the Data Center and Gaming segments, the company reported.
Shopify Inc. saw its stock rally following news of its integration with OpenAI. This integration enables instant in-chat checkout for ChatGPT users. The company's third-quarter earnings demonstrated 32% year-over-year growth in both gross merchandise value and revenue.
Rocket Lab USA Inc. shares surged after securing multiple launch agreements. A significant development was an $816 million contract to provide 18 missile warning, tracking, and defense satellites in low Earth orbit, marking the largest contract in the company's history.
Four of ARK's actively managed ETFs underperformed broad-based global equity indexes during the fourth quarter. Two ETFs either outperformed or delivered mixed results, according to the firm’s report. Cathie Wood, ARK's CEO, stated that the innovation space is recovering and being revalued, noting that headwinds previously pressuring disruptive technologies are shifting into structural tailwinds.
Coinbase's "Everything Exchange" Ambitions
Coinbase CEO Brian Armstrong announced in January the exchange's intention to pursue an "everything exchange" strategy in 2026. This strategy aims to integrate cryptocurrency, equities, prediction markets, and commodities across spot, futures, and options products. The plan positions Coinbase to compete with traditional brokerages and expand its offerings beyond digital assets into tokenized securities and event-based markets.
"Goal is to make Coinbase the No. 1 financial app in the world," Armstrong wrote, emphasizing that the company is investing in product quality and automation to support this expansion.
The exchange ventured into prediction markets in late 2025 through a partnership with Kalshi, a federally regulated platform approved by the U.S. Commodity Futures Trading Commission. Leaked screenshots in November revealed a Coinbase-branded prediction interface supporting USDC or USD trading across economics, politics, sports, and technology categories. This product operates through Coinbase Financial Markets, the exchange’s derivatives division, utilizing Kalshi’s regulatory framework to offer event contracts structured as yes-or-no questions.
Coinbase plans to issue tokenized equities in-house, a move that differentiates it from competitors that typically rely on third-party providers for stock tokens.
Goldman Sachs upgraded Coinbase from neutral to buy on January 6, increasing its 12-month price target. The firm cited growing confidence in Coinbase's diversification strategy. Analyst James Yaro highlighted Coinbase’s efforts to expand beyond spot cryptocurrency trading, identifying initiatives in infrastructure, tokenization, and prediction markets as potential growth drivers.
David Duong, the exchange’s head of investment research, stated that Coinbase anticipates broader cryptocurrency adoption in 2026. This is expected to be driven by increased participation from both retail and institutional investors as regulatory clarity improves.
Coinbase has indicated it may withdraw support for the ongoing draft Crypto Market Structure Bill. This decision follows last-minute changes that the industry claims would effectively end decentralized finance, according to company statements. The legislation is currently facing bipartisan disagreements and pressure from the banking industry.