Cathie Wood, CEO of Ark Invest, speaks during an interview with CNBC on the floor of the New York Stock Exchange (NYSE) in New York City on February 27, 2023.
Brendan McDiarmid | Reuters
Cathie Wood, CEO of ARK Invest, said she did not participate in Arm’s initial public offering last week because she considered the British chip designer overvalued compared to its competitive position.
ARM, a Cambridge-based company controlled by Japanese investment giant SoftBank, was listed on the Nasdaq stock exchange in New York on Thursday with an initial public offering price of $51 per share, at a valuation of around of US$60 billion. Shares jumped nearly 25% on the first day of trading, closing at $63.59.
Since then, the initial enthusiasm has faded as shares have suffered consecutive daily declines, ending Tuesday’s trading session at $55.17.
Speaking on CNBC’s “Squawk Box Europe” on Wednesday, Wood said the recent frenzy over companies exposed to AI was justified and that “innovation is being undervalued given the enormous opportunities we see before us, that AI is catalyzing in a very important way.”
“With regards to Arm, I think there might be too much focus on AI when it comes to Arm and maybe not enough focus on the competitive dynamics there,” she added.
Arm CEO Rene Haas and executives celebrate as Softbank’s Arm, the chip designer, holds an initial public offering (IPO) on the Nasdaq Market website in New York, US, on September 14, 2023.
Brendan McDiarmid | Reuters
“Therefore, we did not participate in this IPO and also compared it with the stocks in our portfolios. We think Arm came from a high valuation standpoint and we see names in our portfolios that are much lower priced and have more exposure to AI.”
The arm declined to comment.
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Top holdings in Wood’s flagship ARK Innovation ETF include Tesla, Shopify, UiPath, Unity, Zoom, Twilio, Coinbase, Roku, Block, and DraftKings.
After taking a hit during the last round of aggressive interest rate hikes by the U.S. Federal Reserve, ARK ETFs have made a comeback this year as investors flock to stocks exposed to artificial intelligence. Wood said the expectation that interest rates will peak would reinforce this trend.
“The desire for innovation is moving here, and I think one of the reasons is that a lot of investors and analysts are starting to look at the rate hike moves we’ve been seeing, which have broken records over the last year, and the other way. ”
With inflation falling in major economies and central banks expected to begin to ease their aggressively restrictive monetary policy over the next year, Wood suggested that the coming period “should be a very good environment for innovation and global strategies.” of major trends.”
ARK Invest on Wednesday acquired British ETF issuer Rize ETF for £5.25 million ($6.5 million), marking the company’s first venture into the European passive investing market.
Europe has not yet had access to real investment in the company’s US-based ETFs, despite these representing about 25% of demand for the company’s research since ARK was created in 2014, Wood said.
“The cost of technology, especially with AI, is falling now, so it will be much easier to build and scale technology companies anywhere in the world,” Wood said. “This isn’t just Silicon Valley anymore.” “We are very open about emerging technologies around the world, including Europe.”
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