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Cathie Wood: My Stocks Aren't in a Bubble, but Yours May Be

'Our strategies would be flying if we were [in a bubble]. I think we have not begun rewarding innovation,' said Ark's Wood.
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Market-darling investor Cathie Wood said the stocks held by her Ark Investment Management ETFs aren’t at frothy levels, but “benchmark” stocks are.

By benchmark, she’s probably referring to technology giants Meta Platforms (Facebook)  (FB) - Get Meta Platforms Inc. Class A Report, Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report, Amazon  (AMZN) - Get, Inc. Report, Apple  (AAPL) - Get Apple Inc. Report and Microsoft  (MSFT) - Get Microsoft Corporation Report.

The biggest holdings of Ark’s benchmark Ark Innovation ETF ARKK are Tesla TESLA, Coinbase Global COIN, Teladoc Health TDOC, Roku ROKU and Zoom Video Communications ZM.

“We are not in a bubble,” Wood told CNBC. “Our strategies would be flying if we were. I think we have not begun rewarding innovation for what’s about to happen. So that’s where our conviction comes from. The bubble is in the benchmark stocks.”

Ark Innovation has slumped 20% this year and 11% over the past 12 months. But it’s up 98% over the last two years, and 41% annualized over the past five years.

Wood is all about disruptive innovation. And “the other side of [it] is creative destruction, and we do believe that traditional benchmarks are where that’s going to take place,” she said.

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This year’s market leaders, financial and energy stocks, are the most vulnerable, Wood said.

As for Tesla, Morningstar analyst Seth Goldstein thinks it’s overvalued, putting fair value at $680. It recently traded at $1,096, down 4%.

“The market is assuming Tesla becomes a top-five automaker globally in annual vehicles sold and is successful in launching its high-margin autonomous driving software subscription service,” he wrote last month.

“Our base case still assumes Tesla is successful in becoming a top-10 automaker.”

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