Famed for her bold investment strategies targeting disruptive companies, Cathie Wood and her company ARK Invest have carved out a niche in the financial world. While ARK's exchange-traded funds (ETFs) offer diversified exposure to various industries, its core holdings often revolve around a select group of innovative companies.
For investors seeking high-growth options and looking to take a page out of the Cathie Wood investing playbook, three companies embody her investment philosophy and may be deserving of a spot in your portfolio today: Coinbase Global (COIN -7.68%), Robinhood (HOOD -3.02%), and Tesla (TSLA 15.31%).
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1. Coinbase
Few other technologies embody the key characteristics that Wood and her company look for -- such as innovation and disruption -- like blockchains and cryptocurrencies. While ARK Invest is a big supporter of Bitcoin, the world's most valuable cryptocurrency, the firm's top holding is Coinbase, according to Morningstar.
Although investing in Coinbase could be a timely opportunity since crypto is building momentum for another bull market, the long-term potential is what's most alluring. In the last couple of years, Coinbase underwent a dramatic transformation.
Previously, the company derived more than 90% of its revenue from transaction fees. But now, it boasts a diversified revenue model that caters to retail and institutional investors. Today, transaction fees only account for about 55% of total revenue.
Coinbase is in the middle of an international expansion strategy and has released its very own blockchain. The company is providing key services to the majority of the spot Bitcoin exchange-traded funds (ETFs) that recently launched. It's making money in virtually every way possible.
As crypto continues evolving and proliferating in financial markets, Coinbase is an ideal proxy to ride the waves of this momentum. The stock is still more than 30% off its highs. Considering that Coinbase barely resembles the company it once was, it's no wonder it's ARK Invest's No. 1 holding.
2. Robinhood
While Coinbase has become the premier platform for all things crypto, Robinhood is becoming the go-to platform for all things finance. It initially started as an app to simplify investing, but the company has significantly expanded its product offerings during the past year.
Now, Robinhood offers subscription plans, individual retirement accounts (IRAs) that offer a 3% match for Robinhood Gold members, savings accounts, and even a new credit card that boasts 3% cash back on all purchases. It also allows users to trade a handful of cryptocurrencies.
To quantify the potential for Robinhood, consider that total assets under custody are at an all-time high while its monthly active users remain at just over 10 million, half of its peak of 21.3 million. In other words, there are fewer Robinhood users today, yet more money is under custody.
With fewer users but more assets on its platform, Robinhood can generate more revenue per user through interest on customer cash and margin lending while exploring additional monetization avenues and enhancing customer loyalty. This strategic advantage strengthens the platform's financial position, resilience, and potential for long-term growth and profitability.
Even with its stock up more than 40% in 2024 so far, Robinhood's robust lineup of products will attract more users looking for a variety of financial products beyond trading. Best of all, as younger demographics come of investing age, Robinhood's simple and smooth app may become the de facto standard for people looking to explore the world of Wall Street and step up their personal finance games.
3. Tesla
It's been tough sledding for Tesla during the past year. As the electric-vehicle (EV) market has shown signs of slowing, Tesla's industry-leading profits have returned to earth from their previous astronomical levels.
After Tesla missed sales projections in Q1 2024, Wood doubled down on her confidence in the company. As she sees it, Tesla is the ideal company for investors looking to invest in future technologies -- specifically, artificial intelligence (AI), robotics, and autonomous driving.
In a recent appearance on CNBC, Wood stood by her previous estimate that Tesla will reach a price of $2,000 per share. That would be a monumental increase of more than 1,000% and make Tesla the most valuable company in the world, based on today's numbers.
Although the coming year might be lackluster for Tesla -- a reality that even management acknowledged on its recent earnings call -- it's Tesla's long-term vision that makes it attractive. Most notably, it's making considerable progress in its pursuit of autonomous driving. Once solved, this will pave the way for what Wood believes could generate up to $10 trillion in revenue by 2030 -- robo-taxis.
With a self-driving taxi fleet, Tesla could transform its bottom line and revolutionize how we travel. According to Wood, this would make it "one of the most important investment opportunities of our lifetimes."
