E-commerce has been a highlight for markets through the start of the new year, not only in the United States but also in foreign markets. The Dow Jones Internet Commerce Index is up nearly 21% YTD, for example. That underscores the case for buying the recent price dip on Shopify (SHOP), with the ARK Invest suite adding SHOP shares this past week across three of its ETFs: the ARK Next Generation Internet ETF (ARKW), the ARK Innovation Fund (ARKK), and the ARK Fintech Innovation ETF (ARKF).
ARK’s ETF suite, led by CEO Cathie Wood, added $35 million in SHOP shares on February 17, following analyst disappointment about the e-commerce firm’s outlook for the first quarter. That came despite strong fourth-quarter results. It also follows a series of buy-low plays by the ARK suite, with its commitment to investing in firms that offer disruptive innovations in areas like AI, fintech, genetics, and aerospace technology.
While SHOP has dropped nearly 10% in price recently, it is still up 22% YTD as of February 20, 2023, suggesting that it may still maintain strong momentum despite the recent, more localized dip. ARKK has added the largest number of SHOP shares, followed by the ARKW and ARKF duo.
ARKK actively invests in disruptive innovation firms and charges 75 basis points, having massively outperformed its ETF Database category average and its FactSet segment average, returning 34% YTD compared to 3.8% and 4.6%, respectively. ARKK has added $77 million over the last month, meanwhile.
ARKW specifically targets innovators in online activities such as e-commerce shops like SHOP, charging 88 basis points and returning 37.7% YTD, while ARKF targets fintech innovators for a 75 basis point fee, returning 30% YTD. ARKF also has the largest weight to SHOP, weighted at 9.8%, ARKF’s third-largest stock weighting.
The SHOP dip may be localized, with e-commerce an area that may still benefit from the consumer spending bump in the U.S. over the last few weeks. For those investors looking to play the price dip in the stock, ARK’s suite has strategies worth considering for their exposure to the e-commerce company, including ARKW, ARKK, and ARKF.
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