During the bloodbath that plagued financial markets on Monday, Cathie Wood’s investment management firm Ark Invest loaded up on shares of the largest American cryptocurrency exchange, Coinbase, ending months of selling the stock.
According to a tweet from Ark Invest outlining its trade activity for August 5, the company purchased 93,797 Coinbase shares (COIN) worth approximately $17.8 million at an average price of $189 per share.
Ark Invest Buys Coinbase Shares
Ark Invest made the COIN purchase through three exchange-traded funds (ETFs), including the ARK Innovation ETF (ARKK), the Ark Fintech Innovation ETF (ARKF), and the ARK Next Generation Internet ETF (ARKW). ARKK acquired 65,165 COIN worth $12.3 million, ARKF purchased 15,629 COIN worth $3 million, and ARKW bought 13,003 shares valued at $2.5 million.
The purchases marked Ark Invest’s first since June 2023, when the company bought $21 million worth of COIN. Since then, the asset management giant has been offloading the Coinbase stock to realize profits as the asset surged in value alongside the crypto market.
CryptoPotato reported some of the sales in March and May this year. In mid-March, Ark Invest executed its second-largest weekly COIN sale since July 2023, offloading roughly $150 million in shares amounting to 580,000. Towards the end of that month, the company slashed its holdings again by 74,291 COIN, valued at $20.8 million. Ark made another huge sale in early May, offloading 70,616 COIN for $15 million.
At the time of these sales, especially in mid-March, bitcoin (BTC) was on a northward trajectory, hitting an all-time high of $73,000 and dragging the crypto industry alongside. Crypto stocks were not left behind as shares like COIN surged above $280 from the $117 level it hovered around in early February.
Not Just Coinbase
Ark Invest saw the market’s recent plunge as an opportunity to increase its COIN stash in preparation for future rallies. The Coinbase stock fell as low as $173 on Monday before recovering slightly to $197. According to TradingView data, the asset was trading at $191 at the time of writing.
Notably, COIN was not the crypto-related stock Ark Invest purchased on Monday. The firm also acquired 681,885 shares worth $11.2 million in the crypto and stock trading app Robinhood. Conversely, Ark sold $26 million worth of Jack Dorsey’s Block shares.
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In their latest analysis, Ark Invest’s crypto specialists Julian Falcioni, David Puell, and Dan White, are presenting a review of the Bitcoin market behavior and prospects, delineating the interplay of various economic, technical, and policy-driven factors that could shape the future of this pioneering digital currency.
Bitcoin Validates The Bullish Scenario
Since early June, Bitcoin witnessed a significant decline, dropping more than -25%. More critically, on July 7, BTC fell beneath its 200-day moving average—a key technical threshold. According to Ark, the dip below the 200-day moving average was “a crucial bearish signal that often precedes further declines unless a strong recovery ensues.” Ultimately, Bitcoin displayed significant strength in the last few days and Ark was right in that BTC staged a quick recovery above the 200-day EMA, invalidating the bearish prospects.
Source: X @dpuellARK
A surprising element in June’s Bitcoin volatility was the aggressive sale of approximately 50,000 Bitcoins by the German government. These assets were seized from the illegal streaming site Movie2K and gradually transferred to various exchanges for sale, starting June 19. “The influx of a large volume of bitcoins during a traditionally low liquidity period, around the July 4th holiday, significantly pressured the price downward,” the report notes. Notably, this selling pressure is now gone.
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Despite these challenges, Bitcoin managed an impressive rally of more than 17% in the last few days. Several indicators supported this reversal, according to Ark. The discrepancy between the decline in Bitcoin’s price and the lesser drop in US ETF balances—17.3 %—suggested that Bitcoin was oversold. “This overselling is likely driven by external shocks rather than intrinsic market movements, pointing towards a mispricing that could correct in the medium term,” the experts explain.
Delta between 30d percent change in price vs US ETF flows | Source: X @dpuellARK
Short-term holders, typically a more speculative segment, have been realizing losses as indicated by the sell-side risk ratio. This ratio, calculated by dividing the sum of short-term holder profits and losses realized on-chain by their cost bases, showed more losses than profits, which typically precedes a short-term market correction.
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June also saw significant activity from Bitcoin miners. “Miner outflows, which often prelude market adjustments, mirrored patterns observed around previous Bitcoin halving events, when the reward for mining a block is halved,” says Ark. Such events historically lead to a decreased supply and potential price increases as market dynamics adjust to the new supply level.
On the macroeconomic front, the report notes that the US economic data have been consistently underperforming against expectations, with the Bloomberg US Economic Surprise Index registering the most significant negative deviations in a decade. Yet, the Federal Reserve has maintained a surprisingly hawkish tone, which could influence investor sentiment and financial market stability.
Corporate America is not insulated from these challenges. Profit margins, which peaked in 2021, are on a downward trajectory as companies lose pricing power as Ark notes. This squeeze on profits is prompting price cuts across various sectors, further dampening economic outlooks.
Regarding equity markets, there has been a notable increase in market capitalization concentration, reaching levels unseen since the Great Depression. “This concentration in larger entities with significant cash reserves could be an early indicator of a shifting economic landscape, which historically sees a breakout in favor of smaller cap stocks,” the report says.
These are challenging times for Cathie Wood’s style of investing. The co-founder, CEO, and investor at Ark Invest finds her family of aggressive growth exchange-traded funds losing to the market for the third time in four years in 2024. Can she get back on track? She is certainly not standing still.
Ark Invest made plenty of moves on Tuesday, adding to nine of her existing positions. Roku(NASDAQ: ROKU), Blade Air Mobility(NASDAQ: BLDE), and PagerDuty (NYSE: PD) are some of the names on that shopping list. Let’s take a closer look.
1. Roku
It’s not just Roku’s 81.6 million households that are binge viewing on Roku. Wood has added to her position for four consecutive trading days. Is “binge investing” a thing? Ark Invest now owns more than 9% of Roku’s total shares outstanding.
Like many of the stocks that propelled Wood’s funds to market-thumping returns in 2000 and then again in 2023, Roku was a rock star last year. Shares of the streaming video platform more than doubled. This year has been anything but a welcome rerun. Roku has tumbled 40% in 2024, a laggard that’s buffering in an otherwise buoyant market.
Image source: Getty Images.
Roku is still growing. The number of households leaning on Roku’s operating system to fuel their TV streaming has risen 14% over the past year. Engagement is even better, as the hours streamed in its latest quarter soared 23% in its latest quarter.
There are a couple of things holding Roku back. After a brief profitable run, Roku has now rattled nine consecutive quarterly deficits. It has come through with three straight quarters of positive free cash flow — and nine-figure free cash flow, at that — but investors will applaud the moment that Roku returns to actual profitability.
Another thing holding Roku back is the fear that Walmart entering this space after announcing plans to acquire a small Roku rival could prove disruptive. This isn’t ideal, but it doesn’t seem like a game changer. Regulators have yet to approve the deal, and even if it does clear antitrust hurdles it’s not as if Roku isn’t ready. It’s been battling some of the country’s most valuable consumer and consumer tech companies for years. It’s more than holding its own.
Average revenue per user has also been sluggish, but Roku could be turning that corner. It has experienced just one sequential decline in the last four quarters on that front. With streaming hours outpacing active user growth it’s just a matter of time before advertisers spend more of their money where viewers are spending more of their time.
2. Blade Air Mobility
Compared to Roku’s 40% year-to-date plunge, Blade Air Mobility’s 9% dip in 2024 is a small air pocket of turbulence. Blade Air provides on-demand helicopter transport services, primarily to get well-to-do passengers from airports to city centers in densely populated markets. Getting from JFK to the heart of Manhattan in just five minutes obviously has its appeal if you can afford the convenience. Blade also works with hospitals and other medical partners for the timely transport of organs.
Revenue rose 14% to $51.5 million in its latest quarter, and the top-line jump would’ve been 22% if you back out the BladeOne scheduled jet service between New York and South Florida that it discontinued last year. Margins are improving, but it’s still a couple of years away from profitability.
Growth has slowed from the torrid pace in 2021 and 2022 when revenue more than doubled in back-to-back years. There are a few publicly traded players in this high-end, short-flight air transport niche, but Blade stands out as an early player. It’s investing in high-tech and carbon-neutral electric vertical aircraft to keep up with some of the younger players, but the market for short flights will be a long battle.
3. PagerDuty
PagerDuty is down just 5% this year, but it’s been a frequent purchase for Ark Invest lately. Wood has added shares of the cloud-based provider of enterprise analytics and uptime monitoring every single trading day in June.
PagerDuty’s slowing growth is a concern. It’s been consistently decelerating for nearly two years, going from 34% top-line growth to just 8% in its latest financial update.
Q2 2023: 34%
Q3 2023: 31%
Q4 2023: 29%
Q1 2024: 21%
Q2 2024: 19%
Q3 2024: 15%
Q4 2024: 10%
Q1 2025: 8%
It’s not just Wood who’s taking a shine to PagerDuty this month. Craig-Hallum analyst Chad Bennett assumed coverage of the stock two weeks ago, lifting the firm’s rating from hold to buy. He also bumped the stock’s price target from $21 to $30, translating into 37% of potential upside from where it’s at now. With top-line growth expected to accelerate later this year and PagerDuty posting double-digit percentage beats on the bottom line over the past year, it could be the right call.
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Cathie Wood is famous for her singular investing style. Favoring high growth and disruptors, she often appears to be throwing caution to the wind and willing to tread where other Wall Street titans may fear to go.
However, outré Wood’s strategy might seem to some, there’s one risk she’s not willing to take. Addressing the recent comeback of meme stocks, the Ark Invest CEO recently issued a warning to investors keen to get in on the action, sensibly warning that it will end badly for many piling into speculative names such as GameStop and AMC.
“Buyer beware, there were a lot of people in the first meme stock craze who got hurt badly,” Wood commented.
That said, it’s not as if Wood has suddenly turned to value investing for inspiration. Still following her playbook of exposure to innovators, we’ve decided to get the lowdown on two of the less lauded names that make up part of her Ark Invest portfolio.
Here it appears that the Street is in sync with the Wood view; according to the TipRanks database, both these stocks are rated as Strong Buys by the analyst consensus. Let’s see why.
Prime Medicine (PRME)
The first Wood-backed stock we’ll look at fits Wood’s innovation-focused investing style perfectly. Prime Medicine is a biotech company operating at the forefront of gene editing. Founded in 2019, the company’s innovative approach centers on its Prime Editing platform, a breakthrough technology that allows for precise and flexible editing of the human genome.
Unlike traditional CRISPR methods, which typically create double-strand breaks in DNA, Prime Editing uses a more refined method involving a ‘search-and-replace’ technique to make specific alterations. This method significantly reduces the risk of unintended mutations, enhancing the safety and effectiveness of genetic therapies.
Prime Medicine’s tech holds promise for treating a wide array of genetic disorders, potentially providing cures for conditions that currently have limited or no treatment options. The company’s development efforts span key strategic areas, including hematology, liver, eye, neuromuscular, and lung, although most of the pipeline is still in the pre-clinical stage. One drug, however, is now advancing to the clinic.
In April, the FDA gave the go-ahead for the company’s IND (investigational new drug) application for PM359, its Prime Editor indicated to treat chronic granulomatous disease (CGD). This is the first-ever Prime Editor product candidate to get this far and Prime plans on initiating a Phase 1/2 trial of the drug with an initial data readout from the study slated for 2025.
Meanwhile, Wood significantly bolstered Ark Invest’s stake in PRME during Q1, acquiring 2.85 million shares. The firm’s total holdings now stand at nearly 5.99 million shares, currently worth $45.13 million.
That will probably be considered a good move by Chardan analyst Geulah Livshits, who also likes the look of what’s on offer here.
“The platform nature of its tech means the company should be able to move more quickly for subsequent programs using the same manufacturing and delivery tech,” explained the 5-star analyst. “Additionally, the current regulatory environment is highly supportive of transformative therapies for rare diseases, with FDA officials repeatedly indicating a desire to accelerate the development of such therapies including via greater engagement, use of surrogate endpoints and flexible trial designs. We believe this these factors can enable Prime to achieve sustained growth by advancing programs across and beyond its current pipeline.”
“With Prime on track to initiate IND-enabling activities for 1+ programs in its in vivo liver franchise and to nominate a DC in for RHO adRP in 2024, we believe the company is positioned for value inflection as it transitions from developing a collection of (interesting) science projects to advancing a product pipeline,” Livshits went on to say.
Bottom-line, Livshits rates PRME shares a Buy, while her $17 price target suggests the stock has room for outsized growth of 140% over the coming year. (To watch Livshits’ track record, click here)
Livshits’ bullish take on PRME is no anomaly. All the 9 other recent analyst reviews are positive, naturally making the consensus view here a Strong Buy. With an average target of $15.33, investors could potentially see returns of ~104% within the next year. (See PRME stock forecast)
AbSci (ABSI)
We’ll stay in the biotech space for Wood’s next pick. AbSci is a company that makes use of the current market’s hottest trend – it utilizes generative AI for drug development.
Describing itself as an AI drug creation company, AbSci’s platform can produce high-affinity antibodies targeting specific epitopes entirely through computer simulations. Reflecting their motto, “the data to train, the AI to create, and the wet lab to validate,” AbSci can generate antibody drug candidates much faster than traditional lab techniques. By streamlining what are traditionally laborious steps, AbSci aims to lower costs and reduce the time-to-market for new biologic drugs, thereby addressing critical needs in healthcare.
This said, the pipeline is still in its early stages. Amongst drugs being developed, the company is working on ABS-101, potentially a best-in-class anti-TL1A antibody for which it initiated IND-enabling studies in February. The company anticipates Phase 1 clinical studies for ABS-101 will kick off early next year with an interim data readout slated for the second half of 2025. Additionally, proof-of-concept results for novel immune-oncology drug candidate ABS-301 are anticipated around mid-2024.
As for Wood’s involvement, her firm, Ark Invest, initiated a new position in ABSI stock during Q1, acquiring nearly 3.28 million shares valued at $14.87 million.
The company also has a fan in Scotiabank’s George Farmer, who thinks investors should clock an opportunity while still in its infancy.
“We recommend buying ABSI shares to capture the value potential of the company’s novel AI based drug development strategy and the early-stage biologics pipeline on which it is based,” Farmer noted. “Why? Preclinical results to date support the competitive advantage that lead asset ABS-101, an AI-optimized anti-TL1A therapeutic, may have over existing agents in clinical development for addressing the massive inflammatory bowel disease (IBD) treatment market.”
To this end, Farmer rates ABSI as an Outperform (i.e., Buy), alongside a $13 price target. The implication for investors? Upside of a handsome 182% from current levels. (To watch Farmer’s track record, click here)
Most of Farmer’s colleagues agree with his assessment. Based on a mix of 4 Buys against 1 Hold, the stock claims a Strong Buy consensus rating. The forecast calls for one-year returns of ~90%, considering the average price target stands at $8.75. (See ABSI stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Prior to the Bitcoin Halving event, BTC’s price saw considerable instability, but it has since rebounded, reaching the $66,000 level, triggering bullish predictions from top crypto analysts regarding the coin’s future path.
Captain Faibik, a crytocurrency analyst and trader, has emerged with an intriguing prediction, underscoring a narrative that could potentially propel the price of Bitcoin to the coveted $100,000 mark in the upcoming months.
Bitcoin Poised For A Notable Rally To $100,000
According to Captain Faibik, Bitcoin has managed to hold the $60,000 support level in the wake of bullish investors in the market. As a result, the largest crypto asset by market cap is currently making a strong comeback.
These bullish investors, according to Faibik must reclaim the crucial $72,000 resistance level in order to see a major rally to the $100,000 price level. This scenario acts as a ray of hope for the cryptocurrency community, igniting speculations and influencing projections about Bitcoin’s potential for future growth. Given the anticipated impact of the Bitcoin Halving and bulls, the $72,000 level could be realized in the short term.
The expert previously highlighted that the Bitcoin weekly candle closed above the Exponential Moving Average (EMA) 10, demonstrating that the bulls are still very much in charge of the market. Following the Descending Channel break out in October last year, BTC Bulls has firmly secured the weekly EMA10, prompting the crypto analyst to put his next price target for the digital asset at $100,000.
Faibik also noted that the daily Relative Strength Index (RSI) for Bitcoin has emerged from a falling wedge pattern. This breakout suggests that a 15% to 20% bullish rally in Bitcoin’s value is on the horizon.
Meanwhile, in the daily timeframe, a bullish flag formation is underway, and in the event of an upward breakout from the bullish flag, Faibik anticipates a new all-time high for Bitcoin by May.
Is A $1.5 million Price Level Possible For BTC?
One of the most bullish predictions for Bitcoin this year came from Ark Invest Chief Executive Officer (CEO) Cathie Wood. The CEO foresees the digital asset to rise by over 2,000% reaching a whopping $1.5 million by 2030.
During an interview in Hong Kong, Wood reiterated her projections for BTC, which were supported by a thorough investigation that included institution surveys and evaluations of market volatility.
She stated:
I have been asked this question from different angles, and our analysis from multiple perspectives indicates that by 2030, Bitcoin could rise to $1.5 million. This price prediction is based on a survey of institutions, using a discount rate and volatility analysis.
Initially, Wood’s forecast for Bitcoin was estimated at $600,000 in the next six years. However, considering the effect of the Bitcoin Spot Exchange-Traded Funds (ETFs), she now believes the coin has the potential to hit $1.5 million.
BTC trading at $66,567 on the 1D chart | Source: BTCUSDT on Tradingview.com
Featured image from iStock, chart from Tradingview.com
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
ARK Invest, headed by Cathie Wood, offloaded an additional 80,118 shares of Coinbase, valued at $13.5 million, from two of its investment funds, coinciding with the stock’s ongoing surge in December.
On Dec. 21, ARK Invest sold 68,769 Coinbase shares valued at $11.6 million from its Innovation ETF and 11,349 shares worth $1.9 million from its Next Generation Internet ETF.
With the recent sale of $30 million in Coinbase shares earlier this week, combined with the $108 million and $59 million worth of shares sold in the first and second weeks of December, Ark Invest’s total divestment from Coinbase this month has now reached approximately $210.5 million.
This strategy aligns with ARK’s policy of maintaining a cap on individual company exposure, aiming to keep it around 10% of its holdings.
Coinbase’s stock has been on a significant rise, hitting new yearly highs with a trading price of $168.03. This marks a 3.8% increase for the day, a 53.8% rise over the past month, and an impressive 400% growth year-to-date. However, it is still 50% below its all-time high from November 2021.
Grayscale BTC trust shares reduced
In addition to its Coinbase transactions, Ark Invest has also been reducing its holdings in the Grayscale Bitcoin Trust (GBTC). On Dec. 18, the firm sold over 809,441 GBTC shares from its Next Generation Internet ETF, totaling approximately $27.6 million, the largest sale in over a year.
Ark’s recent sales coincide with a narrowing of GBTC’s discount to net asset value, falling from over 40% in June to around 7.6%.
Increased investment in Block
While reducing its exposure to Coinbase and GBTC, Ark Invest has been accumulating shares in Block. On Dec. 18, the firm purchased 347,692 Block shares for its ARKW fund, totaling around $25.7 million. Additionally, it acquired 158,334 shares worth $12.1 million for its Next Generation Internet ETF.
Block, co-founded by Twitter’s (now X) Jack Dorsey, now represents 6.83% of ARKW’s total assets, with a market value of $116.9 billion.
The futurist investment management firm is one of several awaiting SEC approval for a spot Bitcoin ETF product. In a recent interview, CEO Cathie Wood said “something has changed” at the agency as they handle her fund’s application for a spot Bitcoin ETF.
Bitcoin price has whipsawed this week, pumping as high as $37,900 from the $35,200 handle over Tuesday and Wednesday. Then spot prices for BTC plunged below $35,800 Thursday before recovering with support at the $36,000 level Friday.
Bullish: Cathie Wood’s Bitcoin Price Prediction
The Ark Invest CEO and founder says the Securities and Exchange Commission has started to ask questions about her hedge fund’s Bitcoin ETF filing. Until recently, however, the SEC would simply outright reject Ark’s applications, she said.
Wood is also bullish for Bitcoin because of the upcoming halving and the currency’s 21 million supply cap. Wood said in an interview with Yahoo Finance on Wednesday:
“I think– so if we look at the reasons that bitcoin will scale, so our base case is today 600 to 650– $650,000, and our bull case, based on the scarcity that is now developing[…]”
After this part of her answer, Wood never gave an exact figure for Ark Invest’s base case. Instead, after emphasizing the limited supply of BTC, she pointed to an imminent onrush of institutional investors, noting:
“We think that institutions, if the SEC blesses a bitcoin ETF, institutions will feel like the coast is clear for them to pursue. And we know a lot of institutions have been researching crypto assets for a while and do agree that it is a new asset class.”
The Ark Invest CEO followed up with an appearance on CNBC’s “Squawk Box” to discuss Ark Invest’s ETF products and the still long-awaited SEC approval of Bitcoin ETFs.
Ark Invest Is Very Long on Cryptocurrencies
Ark Invest’s Cathie Wood and her hedge fund Ark Invest are bullish for the future. As a result, they are inveterate blockchain and BTC bulls.
Wood said in an October 2022 interview on Peter McCormack’s “What Bitcoin Did” podcast that she bought $100,000 worth of Bitcoin when it was $250. She said she hasn’t sold it ever since.
At $250 a pop, she most likely made the purchase around 2015. Given today’s average Bitcoin prices on crypto exchanges, that means Ark Invest is sitting on more than $14 million in unrealized profits from the trade.
Wood says she placed the hundred grand bet on Bitcoin after reading Satoshi Nakamoto’s white paper on peer-to-peer electronic cash systems.
Cathie Wood has announced that Ark Invest will collaborate with 21Shares to introduce a new suite of innovative exchange-traded funds (ETFs).
These ETFs are designed to provide investors with diversified exposure to digital assets, including Bitcoin and Ethereum futures contracts and investments in blockchain-related companies.
Ark Invest Unveils New Suite of Digital Asset ETFs
Cathie Wood’s Ark Invest, in collaboration with 21Shares, is preparing for the debut of a series of Exchange-Traded Funds (ETFs). These new offerings are intended to give investors comprehensive options for incorporating digital assets into their investment portfolios.
By utilizing on-chain indicators and their knowledge of the cryptocurrency landscape, the suite is designed to yield long-term capital growth. This will be achieved through strategic investments in futures contracts for Bitcoin and Ethereum, along with the implementation of blockchain technologies.
The ETFs resulting from this collaboration will be listed on the Chicago Board Options Exchange (Cboe), enhancing accessibility for investors. Next week, five distinctive products will begin trading, each with its unique investment focus.
Among the offerings, investors can look forward to ETFs that include Bitcoin and Ethereum futures contracts, providing exposure to the price movements of these leading cryptocurrencies without direct ownership.
Additionally, one of the products will diversify its holdings to encompass “public equities of companies engaged in the blockchain industry,” as described on 21Shares’ website. This approach ensures investors can participate in the blockchain revolution by investing in companies driving innovation.
Notably, while providing exposure to digital assets and blockchain technology, these ETFs do not enable direct investment in cryptocurrencies. Ark Invest emphasized this point by stating, “Neither the funds nor the underlying ETF invest directly in Bitcoin or other digital assets or maintain direct exposure to spot Bitcoin. Investors seeking direct exposure to the price of Bitcoin should consider an investment other than the funds.”
Market Anticipates SEC’s Decision on Spot Bitcoin ETFs
Ark Invest’s announcement coincides with a period of high anticipation in the financial world, as both traditional finance and the crypto community eagerly await a decision on the approval of spot Bitcoin ETFs.
Meanwhile, Ark Invest recently submitted a revised version of its prospectus for a Bitcoin ETF, addressing concerns raised by the U.S. Securities and Exchange Commission (SEC) and providing further clarification.
Notable financial institutions such as Fidelity, Grayscale, and BlackRock have been actively pursuing the establishment of spot Bitcoin ETFs. The potential approval of these funds has driven optimism in the cryptocurrency market, contributing to the recent surge in Bitcoin’s price.
Although the U.S. SEC has already approved funds that invest in Bitcoin futures, the approval of a spot Bitcoin ETF remains pending.
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Tech investor Cathie Wood says she’s hesitating to embrace A.I. darling Nvidia because the company’s shares are now too expensive.
The chipmaker “is priced ahead of the curve,” the ARK Invest CEO wrote on Twitter on Monday, suggesting the stock is too overvalued for it to be a good investment.
Since 2014, @ARKInvest has believed that Nvidia saw the AI future before most other chip companies, and now we believe it will continue to power the AI age. At 25X expected revenue for this year, however, $NVDA is priced ahead of the curve.
Wood’s ARK Innovation ETF cut its shares in Nvidia in mid-January. The chipmaker’s shares are up 172% for the year thus far.
Nvidia experienced the third-largest single-day jump in market value on Thursday after the company predicted $11 billion in sales for the current quarter, far higher than analyst expectations. The chipmaker now has a market capitalization of $960 billion, behind just four other U.S. companies.
Nvidia’s rosy guidance also lifted the entire sector, with A.I.-affiliated stocks gaining $300 billion in value on Thursday.
The rally in A.I.-affiliated tech companies is leading some observers to worry about a bubble. Economist David Rosenberg said that the boom looked “very weird” in a Thursday interview on CNBC, and said there was “no question we have a price bubble.”
Yet, unlike in previous bubbles when “we were getting tremendous valuations from companies that had no earnings,” Nvidia is a real, good company,” said Wharton professor Jeremy Siegel in a Monday CNBC interview. The boom in tech stocks “is not a bubble yet,” he said.
Nvidia shares are up by over 3% in pre-market trading on Tuesday, breaching $400 a share.
Boom and bust
Wood may also be concerned about the boom-and-bust nature of the chip sector. On Friday, the tech investor said she was worried about “shortages” in an interview with Bloomberg. “I begin to think about the cyclicality of a group,” she said.
Chip companies are suffering from a slump, as the sector corrects from the chip shortages in 2020 and 2021. Consumers are buying fewer PCs, smartphones and other consumer electronics, suppressing demand for the chips that power them. Manufacturers and retailers are also selling off excess inventory stockpiled during the chip shortage.
Nvidia, too, is still feeling the effects of the chip slump, reporting a 38% year-on-year decline in quarterly revenue from its gaming division.
Yet the company clearly now sees A.I. as its future, with CEO Jensen Huang announcing a swathe of new A.I. services, products and partnerships on Monday, including a new supercomputer platform to help large tech companies create the next viral A.I. sensation, like ChatGPT.
Tesla
On Monday, Wood called herself an early believer in Nvidia. “In 2014, most investors considered Nvidia, priced at ~$5, simply a PC gaming chip stock. Ark Invest’s first principles research pointed to Nvidia as the premier equity play on A.I.,” she tweeted.
But Wood said that investors are wrong to think that Nvidia is “the only A.I. play.”Electric carmaker Tesla “is the most obvious beneficiary of the recent breakthrough in A.I.”, she tweeted on Monday, due to its investments in automated driving.
In our view, $TSLA – at 6X revenues – is the most obvious beneficiary of the recent breakthroughs in #AI, as it aims for an $8-10 trillion revenue TAM in autonomous mobility by 2030. But, based on our research for the last five to six years, @ARKInvest sees dozens of AI winners!
Wood called Tesla “the biggest A.I. play out there” in a conversation with Fortune editor-in-chief Alyson Shontell at the MPW Next Gen Summit in May. Tesla could be in the “pole position” to grab “the lion’s share” of the autonomous taxi market, at least in the U.S., the investor predicted, estimating that robotaxi platforms could be worth $8-10 trillion globally.
Tesla CEO Elon Musk believes the company will roll out full self-driving this year, and will help to drive its profits. Yet the company had to pause installations of its beta “Full Self-Driving” software earlier this year, after the National Highway Traffic Safety Administration deemed it a “crash risk” and asked for a safety recall.
Customers using Tesla’s existing automated driving services have reported thousands of instances of braking problems and abrupt acceleration, according to a set of complaints, covering a period between 2015 and March 2022, leaked to German outlet Handelsblatt before the weekend.
Speaking at the Forbes 30/50 Summit in Abu Dhabi on Monday, famed stock picker Cathie Wood of Ark Invest sharply criticized passive investing and touted disruptive innovation stocks, even as her flagship fund continues to post lackluster returns as shares of top holdings like Tesla and Zoom continue to struggle.
“Fear has pushed investors back to their benchmarks,” Wood warned.
Patrick T. Fallon/AFP via Getty Images
Key Facts
The founder and CEO of Ark Invest on Monday criticized the wider shift toward passive investing as “backwards looking,” arguing that “fear” has pushed investors back to “mimicking indexes, which is kind of mindless.”
“I believe this is the most massive misallocation of capital in the history of mankind,” Wood told Forbes, arguing that her firm’s thesis of investing in disruptive technology is now more important than ever, given today’s uncertainty in markets.
The famed stock picker emphasized that she still sees “explosive growth opportunities” ahead, but increasingly risk-averse investors have “defaulted to benchmarks” amid concerns over inflation, the Russia-Ukraine conflict and the Federal Reserve’s upcoming rate hikes.
Wood’s success soared in 2020 when her flagship Ark Innovation fund surged nearly 150%, but performance has since declined, with the fund falling 24% last year and another 37% so far in 2022.
The Ark Invest CEO remains undeterred by her skeptics: “Betting against innovation long term is a losing proposition,” she said, adding that the “visceral response [from critics] tells me we’re doing something right.”
While innovation was first “turbocharged” by the problems that arose during the coronavirus crisis in 2020, Wood now sees parallels to today’s market: “I feel we’re back there again, and now with the Russia-Ukraine issues, we have many more problems.”
Crucial Quote:
“Innovation solves problems. We now have a lot more problems,” Wood said.
What To Watch For:
With energy prices skyrocketing in recent weeks amid the conflict between major exporters Russia and Ukraine, that has created a “huge supply shock,” which is “really going to hurt consumer purchasing power,” Wood told Forbes. “I think the risks of recession have increased dramatically.”
Surprising Fact:
Though experts widely agree that rising oil prices could lead to higher inflation in the United States, a by-product of surging energy prices is that they will “only accelerate the push toward electric vehicles and autonomous transportation,” according to Wood. That’s good news for her biggest holding, electric vehicle maker Tesla—with the Ark Innovation fund holding a stake worth more than $1 billion. Wood’s flagship fund also has large positions in virtual healthcare company Teladoc (worth just over $750 million), video streaming platform Roku (worth over $700 million), videoconferencing service Zoom (worth around $650 million) and cryptocurrency exchange Coinbase (worth $600 million).
