An official second-quarter GDP estimate won’t be available until later next month, but several experts — including Kathy Wood of Ark Invest — are calling for a recession.
“We think we’re in a recession,” Wood says in a recent interview with CNBC.
“We think there is a big problem with stocks – and I’ve never seen an increase of this size before in my career. I’ve been around for 45 years.”
Based on market performance, Feelings are definitely bearish. The S&P 500 is down 20% year-to-date. Wood’s flagship Ark Innovation ETF (ARKK) has fallen more than 50% over the same period.
But investors are not giving up. CNBC notes that Fact Set data shows that ARKK saw inflows of more than $180 million in June.
“I think the inflows are happening because our clients have been diversifying away from broad-based benchmarks like the Nasdaq 100,” Wood says. “We are fully committed to disruptive innovation. Innovation solves problems.”
For those who share Wood’s vision, here’s a look at the top three collectibles in ARKK.
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Zoom Video Communications (ZM)
When meetings and classes moved online due to the pandemic, Zoom’s business boomed.
But as the economy reopened and employees started returning to the office, there were concerns about the growth potential of this video communications company.
Year-to-date Zoom shares are down 42%.
But Wood still sees opportunity in the stock. In fact, Zoom is currently ARKK’s largest holding, accounting for 10.1% of the box’s weight.
Earlier this month, Ark Invest released a research report outlining how Zoom’s stock could see a glorious recovery in the not-too-distant future.
“According to ARK’s open source research and model, Zoom’s stock price could approach $1,500, accruing an annual growth rate of 76%, in 2026,” Wood’s team wrote.
With Zoom shares trading at around $106 a piece at the moment, this price target indicates a potential rally of over 1,300%.
Tesla has always been a staple for growth investors. But now, it’s also a name worth considering for contrarian investors — given how much the stock has fallen.
Since hitting a high of $1,229.91 on November 4, the stock has fallen an astonishing 46%.
But the work is still on the right track. In the first quarter, Model S, Model X, Model 3 and Model Y deliveries totaled 310,048 vehicles, an increase of 68% year over year.
Ark Invest also sees a game-changing product coming for the company – robotaxi.
“Tesla’s prospective robotics business line is a key driver, contributing 60% of projected value and more than half of projected EBITDA in 2026,” Arc analyst Tasha Kenny wrote in a report in April.
In that report, Ark predicts the stock price for Tesla will be $4,600 by 2026. That’s a potential upside of more than 590% from where the stock is today.
So it should come as no surprise that Tesla is ARKK’s second largest with a weight of 8.6%.
The secular trend of video-on-demand streaming has led to many technology winners.
Roku is one of them. Since it went public in September 2017, the stock has returned more than 200%.
The company’s platform allows users to access streaming services such as Youtube, Netflix, and Disney+. Roku also offers its own ad-supported channels that display licensed third-party content.
The company added 1.1 million active accounts in the first quarter, bringing its total active accounts to 61.3 million. Revenue increased 28% year over year to $734 million.
Although Roku’s business has grown, Investors The bail was done in a fast way. The stock is down a staggering 82% in the past 12 months.
But Ark Invest isn’t giving up on Roku. In fact, Roku remains ARKK’s third largest, accounting for 8.4% of the fund’s weight.
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