Cathie Wood, renowned investor and chief executive officer of Ark Invest, has become a prominent figure on Wall Street with her forward-thinking investment strategies and bold predictions. By constructing exchange-traded funds (ETFs) that focus on the disruptive innovations that are transforming the world, Wood has consistently captured the attention of investors seeking high-growth opportunities.
Three of her favorite assets have garnered significant attention recently, but remain at discounted prices relative to their long-term potential.
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1. Coinbase
Wood and Ark Invest have been some of Coinbase's (COIN 5.68%) biggest fans ever since it went public in 2021. Over the past two years, Ark funds have bought more than 11.7 million shares of Coinbase, worth about $600 million at recent prices and representing a 5% stake in the company. These purchases have been allocated more or less evenly across the Ark Innovation ETF, the Next Generation Internet ETF, and the Fintech Innovation ETF.
Despite a lawsuit filed this month by the Securities and Exchange Commission accusing Coinbase of offering unregistered securities and operating an exchange out of compliance, Wood's conviction in the company remains firm.
In an interview with Bloomberg, Wood highlighted that unlike a similar lawsuit targeting its competitor Binance, the Coinbase lawsuit doesn't include allegations of fraud or more serious claims such as commingling user funds with company money. Based on the differences between those lawsuits, Wood views Binance's business as more at risk, which could lead to reduced competition for Coinbase.
Coinbase will also likely be a beneficiary as blockchain technology continues to permeate various industries and cryptocurrencies gain wider adoption. Although legal obstacles remain, Wood believes that Coinbase's long-term potential outweighs the short-term risks, and she viewed the recent dip in the share price in the wake of the SEC's suit as an opportunity to scoop up another $21.6 million worth of shares.
2. Bitcoin
Given that she's a fan of Coinbase, it makes sense that Wood is also an admirer of the world's most valuable cryptocurrency. Though her funds are limited to investing in the Grayscale Bitcoin Trust (GBTC -1.49%) rather than Bitcoin (BTC -2.07%) itself due to legal restrictions, Wood sees Bitcoin as one of the most innovative assets ever created, aligning perfectly with her investment thesis.
She views Bitcoin's rise in the last decade-plus as just a foretaste of the growth to come as more people come to realize that the cryptocurrency's transparency and security make it a viable alternative to traditional financial instruments.
Wood believes that as more economic turbulence occurs throughout the world, Bitcoin's value proposition will only increase as it proves it can serve a variety of use cases. Increasingly, Bitcoin is being touted as an inflation hedge.
But as inflation turns into deflation, a phenomenon Wood thinks is already happening, Bitcoin is in a position to once again prove that its transparency and safeguards against counterparty risk are valuable.
Wood recently doubled down on her prediction that Bitcoin can reach a price tag of $1 million by 2030, which would be an astronomical leap of more than 3,600% from today's prices.
3. Tesla
While Wood loves her cryptocurrency investments, her favorite holding is undoubtedly Tesla (TSLA -1.11%). More than 8% of all Ark holdings are in the electric vehicle company's shares, a combined position worth more than $1.19 billion. Tesla checks nearly all of the boxes Wood looks for in an innovative company.
The primary reason Wood can't get enough of Tesla: artificial intelligence (AI). She sees the potential for AI to be one of the primary advantages that Tesla will use to increase its dominance of the EV market.
As AI systems become more capable and robust, Wood believes Tesla is well positioned to benefit from the growth of the autonomous ride-hailing industry, which she thinks could produce more than $600 billion in annual revenue for Tesla one day.
In addition, Wood believes that Tesla's continued dominance in the retail EV market will be fueled by its streamlined and cost-efficient production processes. These advancements are expected to enable Tesla to expand its reach to lower-income buyers and offer more affordable pricing options across various market segments.
Wood's confidence in Tesla is so strong that she anticipates the stock hitting $2,000 per share by 2027. Based on today's prices, that would represent a 750% jump in just four years.
