Summary Bitcoin shows resilience with its relative chart to the S&P 500 nearing all-time highs, despite recent volatility. I upgrade ARK Fintech Innovation ETF (ARKF) to a buy due to its strong recovery and positive crypto trends. ARKF, with a 13.4% EPS growth rate, benefits from bullish seasonal trends and a supportive technical chart. The ETF's portfolio is heavily weighted in growth sectors, with significant exposure to crypto, enhancing its long-term growth potential. Don’t count the bitcoin bull market out. While the world’s largest cryptocurrency fell from near $110,000 to below $80,000 from January through the April nadir, the relative chart of bitcoin to the S&P 500 is very close to all-time highs. A series of higher lows and higher highs dates back to late 2022. All the while, crypto-related fintech stocks have been volatile, but generally positive. I had a hold rating on the ARK Fintech Innovation ETF (ARKF) in the second quarter of 2024 . Shares have soared 30% since then, but it has been a wild ride. The Cathie Wood fund struggled through the fall but then took off when President Trump won re-election. Price action since Inauguration Day has been less stellar, with ARKF plunging from near $45 to below $28. But the ETF has rallied hard since mid-April, up 30% in a few weeks. Actually, it’s entire gain since my last analysis has come just April 7. I am upgrading the fund to a buy. Bitcoin vs SPX: Nearing New All-Time Highs Stockcharts.com According to the issuer , ARKF is an actively managed ETF that seeks long-term growth of capital. It aims to achieve this investment objective by investing under normal circumstances primarily in domestic and foreign equity securities of companies that are engaged in the fund’s investment theme of financial technology innovation. ARKF is a small ETF with just $905 million in assets under management as of April 25, 2025. Its annual expense ratio is moderate to high at 75 basis points, and the product does not have a trailing 12-month dividend yield . Share-price momentum is rated exceptionally strong by Seeking Alpha’s quantitative scoring system, but volatility is very high. Hence, the ETF Risk Grade is poor at a D- due to the elevated standard deviation and ARKF’s concentrated portfolio. Finally, liquidity is decent, given average daily volume of more than 400,000 shares, and the ETF’s median 30-day bid/ask spread is moderate at 9 basis points, per ARK Invest. For an update on the portfolio, the 1-star ETF by Morningstar plots on the far right side of the style box, indicating its bent toward the growth style. Much depends on how crypto performs and with industry-specific fundamental trends, such as Robinhood’s (HOOD) foray into attracting higher-net-worth investors. I concede that the valuation at more than 28 times earnings is not cheap, but ARKF’s long-term EPS growth rate is above that of the broader market at 13.4%. With bitcoin creeping higher and key momentum themes recovering, I assert that there is more left in the tank for the fund. ARKF: Portfolio & Factor Profiles Morningstar ARKF is a fintech ETF—more than 60% of the allocation is invested in the Information Technology and Financials sectors. Communication Services and Consumer Discretionary—a pair of growth corners of the market—round out ARKF’s portfolio. Of course, there’s a crypto play here since the product owns ARK’s bitcoin product. ARKF: Heavy on Growth with Bitcoin ETF Exposure Seeking Alpha Seasonally, we are entering a particularly bullish stretch. Over the past five years, returns have been strongest from May through August. So, if historical trends play out, the calendar will favor ARKF. ARKF: Bullish May-August Trends Seeking Alpha The Technical Take With a fair valuation given the earnings growth story, ARKF’s chart is encouraging. Notice in the graph below that shares retreated to a key long-term support line in the upper $20s. The long-term 200-day moving average remains upward sloping with price above that key trend-indicator line—something that can’t be said for the S&P 500. ARKF encountered selling pressure, however, right at the mid-2021 pullback-low of $44 back in Q1, so it was natural to expect a significant correction. But take a look at the RSI momentum oscillator at the top of the chart that there was a minor bullish RSI divergence, which may portend a protracted recovery. Before that, a bearish divergence played out, leading to the steep retreat. For now, the mid-$40s remains resistance, while $28 is support. ARKF: Shares Hit Mid-$40 Resistance, Attract Buyers at Trendline Support Stockcharts.com The Bottom Line I have a buy rating on ARKF. The hard Q1-Q2 correction likely washed out weak hands, and I expect a further upswing given crypto price trends and seasonal/technical momentum.
