Cathie Wood, the prominent investing chief at Ark Investment Management, says the firm’s exchange-traded funds should quadruple over the next five years.
“With some of the increased estimates we are now using based on fundamentals, not at all on valuation, we now see a quadrupling over the next five years in our portfolio,” she told CNBC.
It has slumped 10% in the past month and is down 15% year to date, compared with a 25% rise for the S&P 500. Ark Innovation recently traded at $104.95, down 1%.
To be sure, the fund has doubled over the past two years. Its biggest holdings are Tesla (TSLA) - Get Tesla Inc Report, Coinbase Global (COIN) and Unity Software (U) - Get Unity Software, Inc. Report.
Wood is unbowed by the drop in technology stock prices over the past three days. “I get very unsettled when I see people selling at what I know are bargain-basement prices,” Wood said. “Our optimism and confidence have increased in here, not decreased.”
She maintains that Ark funds’ holdings will morph into “mature growth companies” and disrupt incumbents.
“We assume massive multiple compression from this moment on to five years out,” Wood said. “All of our stocks, or most of them, will have FAANG-like multiples,” she said.
Wood was referring to Meta Platforms (Facebook) (FB) - Get Meta Platforms Inc. Class A Report, Amazon (AMZN) - Get Amazon.com, Inc. Report, Apple (AAPL) - Get Apple Inc. Report, Netflix (NFLX) - Get Netflix, Inc. Report and Alphabet’s GOOGL (GOOGL) - Get Alphabet Inc. Class A Report.
She maintains that inflation will soon reverse into deflation: “This is the beginning of the cyclical correction in inventories and commodity prices.”