By David Randall
NEW YORK, March 3 (Reuters) – ARK Invest founder and chief investment officer Cathie Wood reiterated her optimistic stance on Tesla and bitcoin on Wednesday, while warning that the growth of digital wallets “will destroy” traditional banks.
Wood, whose $ 24.4 billion ARK Innovation fund is the largest ETF actively managed by Lipper, said in a webinar that his fund remains “opportunistic” despite the recent drop in the S&P 500, as investors raised concerns about the assessment and the prospect of higher inflation.
“Benchmarks are filling up with value traps” due to the pace of innovation in areas such as artificial intelligence and robotics, said Wood. “We think the big risk is in the benchmarks, not in what we are doing.”
The S&P 500 stock index fell 1.3% on Wednesday. On February 25, the high-tech Nasdaq index fell 3.5%, its biggest daily drop in four months. Both indexes moved in January, but remained up-to-date in the year.
Wood, who founded the company in 2014, became one of the faces of the US stock market boom during the coronavirus pandemic. The ARK Innovation fund grew by 136% in the last 12 months. The fund fell 6.1% on Wednesday and has an appreciation of less than 1% accumulated in the year.
Tesla Inc, which accounts for about 10% of the Ark Innovation fund’s portfolio, remains attractive due to its leadership in autonomous driving, she said. The company’s shares have risen by almost 345% in the last 12 months, despite the drop of almost 20% in the last four weeks.
“Our belief in its autonomous strategy has increased,” she said.
At the same time, companies that recovered during the pandemic, such as Zoom Video Communications Inc and the television streaming platform Roku Inc, remain attractive due to the expected growth rates over the next five years, she said.
Zoom’s shares are “probably undervalued”, while Roku and Amazon.com Inc “will have most of the connected TV market,” said Wood.
Along with technology stocks, Wood said he expects the price of bitcoin to continue to rise as more U.S. companies diversify their cash investments and add cryptocurrency to their balance sheets. Tesla Inc, for example, said on February 8 that it bought $ 1.5 billion in bitcoin, while Square said on February 23 that it added another $ 170 million to its bitcoin position in the fourth quarter.
If other American companies do the same, the price of bitcoin could rise between $ 40,000 and $ 400,000, Wood said.
The cryptocurrency rose 7.5% to $ 51,030 in Wednesday afternoon trading. (Reporting by David Randall; Editing by David Gregorio)