Cathie Wood’s Ark Invest is rapidly shedding Chinese stocks as Beijing’s regulatory crackdown expands

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.


Cathie Wood’s Ark Invest is rapidly shedding its positions in Chinese technology stocks amid an ongoing regulatory crackdown by Beijing.

On Friday, Ark Invest sold the last remaining shares of its stake in Tencent, and is quickly shedding KE Holdings, an online property website based in China, and JD.com, according to Ark’s daily trading updates. KE Holdings fell as much as 26% on Monday.

The latest regulatory crackdown in China hit education and tutoring companies on Friday, with companies like TAL Education, Gaotu Techedu, and others plunging more than 50%. China said it is banning tutoring on holidays and weekends for students to lessen the burden of schoolwork, which makes up a big chunk of the tutoring companies business.

The China’s increased scrutiny on certain businesses began late last year following the abrupt cancellation of Ant Group’s IPO. A clampdown on the fintech giant then spread to Alibaba and Tencent earlier this year, with both getting hit with anti-monopoly measures and fines.

Since then, ride-hailing giant Didi, which went public last month, has been hit with regulatory actions by China amid data-security concerns. That crackdown on Didi led to TikTok parent ByteDance shelving its planned IPO.

All in all, the uncertain regulatory environment for Chinese stocks has led to an investor exodus from popular names like Tencent and Alibaba, which were both down as much as 10% and 7% in Monday trades, respectively.

In a webinar with investors earlier this month, Wood said a “valuation reset” among Chinese stocks is occurring, and that their valuations could remain depressed for some time.

“From a valuation point of view, these stocks have come down and again from a valuation point of view, probably will remain down,” Wood said.

On the flip side, Wedbush analyst Dan Ives thinks losses for Chinese tech stocks could lead to gains in US mega-cap tech stocks, as investors rotate out of once popular names like Alibaba and Tencent in favor of Amazon, Apple, Microsoft, and Google.

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Ark Invest’s Cathie Wood defends bitcoin as an inflation hedge in crypto panel with Elon Musk

Cathie Wood
Cathie Wood

  • Cathie Wood defended bitcoin’s role as an inflation hedge during a panel with Jack Dorsey and Elon Musk.
  • The Ark Invest founder and CEO said bitcoin will serve as an inflation hedge in emerging market countries.
  • She said citizens in emerging markets with “significant inflation” will migrate to bitcoin and other means to preserve their purchasing power.
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Ark Invest founder and CEO Cathie Wood defended bitcoin’s role as an inflation hedge during a Wednesday panel discussion alongside Jack Dorsey and Elon Musk.

The fund manager said bitcoin will serve as a hedge against inflation in certain situations, citing emerging markets as an example.

“There are a lot of emerging markets that are suffering from significant inflation-in other words, the purchasing power of those populations is going down. So they are going to migrate to bitcoin and other ways to preserve purchasing power,” Wood said.

She made the remarks when asked what advice she would give for institutions looking to put bitcoin on their balance sheets. Wood added that being able to sell to people who have migrated to bitcoin in inflationary situations would be “very useful” for corporations.

Earlier in the panel, Wood discussed how bitcoin’s fixed supply of 21 million tokens helps it’s role in preserving purchasing power.

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JOIN US JULY 15: Crypto experts from Ark Invest and more share their industry outlooks and the biggest opportunities they’re pursuing

“What’s Next for Crypto” Webinar poster featuring Mrinalini “Ria” Bhutoria of Castle Island Ventures, Yasshine Elmandjra of Ark Invest, and David Grider or Fundstat Global Advisors.
What’s Next for Crypto featuring Mrinalini “Ria” Bhutoria of Castle Island Ventures, Yasshine Elmandjra of Ark Invest, and David Grider or Fundstat Global Advisors.

No asset class has evoked shock and awe across financial markets this year in the way that cryptocurrencies have.

The relatively nascent market pushed the boundaries of what investors had thought was possible. From the record $69 million sale of a non-fungible token to the explosive gains of memecoins, investors have had to quickly smarten up on the space.

To help you get even smarter and distinguish the real opportunities from the noise, Business Insider will host ‘What’s next for crypto?” a webinar on Thursday, July 15 at 2 p.m. ET. Join Insider’s senior investing reporter Vicky Huang, and senior investing editor Akin Oyedele, in conversation with Yassine Elmandjra, the blockchain and cryptoasset analyst at Ark Invest; David Grider, the head of digital assets research at Fundstrat; and Ria Bhutoria, the principal at Castle Island Ventures.

The panel of these three experts will discuss topics including:

  • Investing ideas, opportunities, and use cases in crypto broadly and in specific tokens or coins.
  • Whether the bull market in bitcoin is over for this cycle, and what may happen next following the largest crypto’s plunge from its all-time highs.
  • The prospects for wider and deeper adoption of crypto by institutional asset managers.
  • Price targets for bitcoin, ether, and other major cryptocurrencies, including breakdowns of the theses that back them up.
  • And, the debate around bitcoin’s environmental impact.

The webinar will touch on other major developments in the volatile and evolving space.

Join us on July 15 at 2 p.m. ET/11 a.m. PT for the live conversation. You can register here if you’re an Insider subscriber.

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Cathie Wood’s Ark Invest is working with provider 21Shares to create a bitcoin ETF

Cathie Wood

Ark Invest – the firm run by star stock picker Cathie Wood – has partnered with exchange-traded fund provider 21Shares to to create a bitcoin exchange-traded fund, according to a filing with the Securities and Exchange Commission.

The ARK 21Shares Bitcoin ETF will track the S&P Bitcoin index and trade on the Cboe BZX Exchange under the ticker ARKB. Its investment objective is quite simple: track the price of bitcoin.

A prominent bitcoin bull, Wood has been loading up on bitcoin-related investments such as Grayscale Bitcoin Trust and Coinbase Global over the last few months.

The proposed bitcoin ETF joins a long list of over a dozen applications waiting for approval from the SEC. The agency for its part has recently postponed another decision to approve a bitcoin ETF.

Bitcoin has gained mainstream adoption of late, soaring above a market capitalization of $1 trillion. It has however been trading rangebound in the past days at just half of its $64,000 peak in April.

Read more: Here are 3 altcoins that could surge by 1000% – including the eco-friendly version of bitcoin – according to a crypto analyst and entrepreneur who vets early-stage projects

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US stocks trade mixed with Nasdaq at a record high as investors weigh recovery signals

Stock Market

US stocks closed mixed on Wednesday, with the S&P 500 making turning lower late in the day while the Nasdaq ended at a record high.

“US stocks are stabilizing as investors are clearly in wait-and-see mode over the current wave of inflationary pressures,” Edward Moya, senior market analyst at Oanda, said in a statement. “Equities have quickly bounced back from last week’s Fed-induced selloff as investors quickly realize interest rates will not move anytime soon.”

Equities were up and down throughout the day, dipping lower after Atlanta Fed President Raphael Bostic said the central bank could raise rates in 2022, as well as start tapering asset purchases in the near term. He also said higher inflation in the US could last up to nine month.

The US 10-year Treasury note was last at 1.492%. On Tuesday, yields fell 2 basis points, responding to the Fed’s more tempered policy outlook.

Here’s where US indexes stood at the 4:00 p.m. ET close on Wednesday:

Microsoft still has 23% upside potential even after it surpassed a $2 trillion valuation on Tuesday, according to Wedbush analyst Dan Ives. He also increased his price target to $325 from $310 and reiterated his “outperform” rating on the stock.

Mortgage giants Fannie Mae and Freddie Mac plunged as much as 45% following a ruling from the Supreme Court. In a 7-2 decision, the court gave the US President authority to remove the head of the Federal Housing Finance Agency, complicating the prospects for their release from government control.

Meanwhile, the cryptocurrency space has been recovering from its most recent sell-off.

Bitcoin staged a rebound after wiping out all its gains for 2021 at one point the day prior. The world’s largest cryptocurrency climbed as much as 6% to $34,821.53.

Cathie Wood’s ARK ETFs took advantage of last week’s crypto carnage to load up on shares of Coinbase and Grayscale Bitcoin Trust, fund filings show.

Crypto exchange FTX announced it is partnering with Major League Baseball to become the first cryptocurrency exchange sponsor in professional sports.

Oil rose ahead of a meeting of the OPEC+ group next week.

West Texas Intermediate crude climbed 0.48% to $73.20 per barrel. Brent crude, oil’s international benchmark, jumped by $0.57% to $75.24 – edging to its highest since late 2018.

Gold slightly rose 0.03% to $1,778.03 per ounce.

Lumber fell as much as 3% to $859.8 per thousand board feet, extending the fall beneath $900 as the commodity’s rally continues to cool off.

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Cathie Wood’s Ark ETFs bought the dip in DraftKings after a short-seller report sent shares tanking

DraftKings New England Patriots
  • Two of Cathie Wood’s ARK ETFs bought a combined 870,299 shares of DraftKings on Tuesday.
  • The purchases came after a dip in share prices due to a short-seller report from Hindenburg Research.
  • DraftKings received analyst support from Morgan Stanley and Jefferies after the news broke.
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Two of Cathie Wood’s actively managed Ark ETFs bought the dip in DraftKings on Tuesday, acquiring a combined 870,299 shares after a short-seller report sent the stock sinking.

Specifically, Wood’s Ark Next Generation Internet ETF bought 181,597 shares, while the Ark Innovation ETF bought 688,702 shares, according to a daily email from Ark’s trading desk outlining recent trades.

The combined stock was worth some $42,218,204 as of Tuesday’s closing price.

DraftKings represents the 17th-largest holding of the Ark Innovation ETF and the 19th-largest component of the Ark Next Generation Internet ETF.

DraftKings’ stock came under pressure on Tuesday after the noted short-seller Hindenburg Research released a report detailing what they describe as “black market operations” at the fantasy sports and sports betting operator.

While the stock fell as much as 12% on Tuesday, it recovered to end the day down just 4%. Now, DraftKings has received some much-needed analyst support.

Thomas Allen, the managing director of equity research at Morgan Stanley, reiterated his “overweight” rating and $58 price target on shares of DraftKings after the short-seller report.

The analyst argued that “unregulated” market exposure is common for international online gaming/sports betting companies and that DraftKings’ partner, SBTech, has exposure that is more in the “grey market” area.

“We are Overweight DKNG on the thesis that its customer acquisition advantage through its legacy DFS business will drive outsized US B2C sports betting revenue and, in turn, profitability compared to consensus,” Allen said.

Jefferies analyst David Katz also maintained his “buy” rating and $75 price target on DraftKings, arguing that the SBTech acquisition was mainly meant to help the company own and developing the right betting technology, not gain international revenue.

Read more: A client portfolio manager at Cathie Wood’s Ark Invest shares which of its ETFs are projected to see the most growth over the next 5 years, and explains the recent downturn in the broader family

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Cathie Wood’s ARK Invest buys the dip in bitcoin amid a volatile 50% sell-off

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • A more than 50% decline in bitcoin hasn’t stopped Ark Invest’s Cathie Wood from buying the dip in the cryptocurrency.
  • Ark Invest’s Next Generation Internet ETF has purchased 697,996 shares of the Grayscale Bitcoin Trust over the past two days.
  • Wood is sticking by her long-term $500,000 price target for bitcoin and believes the recent environmental concerns surrounding they cryptocurrency are “misguided.”
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Cathie Wood’s Ark Invest is buying the dip in bitcoin, according to the firm’s daily trade report that summarizes trades made in its family of ETFs.

The ARK Next Generation Internet ETF purchased 516,001 shares of the Grayscale Bitcoin Trust on Monday, worth about $17 million based on the fund’s closing price on Monday. The ETF purchased an additional 181,995 shares on Tuesday, worth about $5.7 million based on the fund’s Tuesday closing price.

Ark Invest’s $22 million purchase in the bitcoin fund comes after the cryptocurrency sold off more than 50% from its record-high over the past two weeks. The volatility in bitcoin was in part driven by Tesla CEO Elon Musk’s concerns about the environmental impact of bitcoin mining, but Ark Invest has called those concerns “misguided.”

The volatility in bitcoin accelerated further after China reiterated its ban against the cryptocurrency for banks and other financial institutions, as well as warning against mining and trading it.

But Wood remains bullish on bitcoin, and is sticking by her long-term price target of $500,000. That price target is driven by expectations that institutional investors will continue to allocate a portion of their portfolios to bitcoin over time, which would spark demand for the cryptocurrency and help drive up the price.

The Grayscale Bitcoin Trust is the sixth largest holding of the Ark Next Generation Internet ETF, with 7.6 million shares worth about $240 million as of Tuesday’s close, according to fund holdings data from ARK Invest.

Bitcoin is up about 30% since it hit a low of $30,066 on May 19.

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Cathie Wood’s space ETF sold off Virgin Galactic stock before it staged a massive rally following a successful test flight

Cathie Wood
Cathie Wood is the CEO and chief investment officer of ARK Invest, which runs three of the highest-returning stock ETFs of the last three years.

  • Cathie Wood’s Ark Invest sold most of its Virgin Galactic holdings as of May 25.
  • The gradual selling happened just before Virgin Galactic launched a successful test flight that pushed its stock to a six-week high.
  • As of May 25, only Wood’s ARKX had Virgin Galactic shares, holding only about $322 of the commercial-space flight company.
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Cathie Wood’s Ark Invest ETFs sold off most of their Virgin Galactic holdings just before the commercial spaceflight company launched a successful test flight that pushed its stock to a six-week high.

The space tourism company completed its third crewed flight to the edge of space on May 22 following a botched attempt in December. Virgin Galactic shares were up 56% in the run-up to the launch and rose further when markets opened on Monday.

But by this time, Wood’s investment management firm has sold most of its holdings.

Only the ARK Space Exploration & Innovation ETF, ARKX, held Virgin Galactic shares out of all the six actively managed ARK ETFs as of May 25.

As of Tuesday, ARKX holds just 12 shares of Virgin Galactic worth around $322. Data compiled by Bloomberg showed that the fund in March had more than 220,000 shares.

The Ark Autonomous Technology & Robotics ETF, or ARKQ, meanwhile, does not hold any shares of the company as of Tuesday. ARKQ, according to Bloomberg, held the bulk of Virgin Galactic shares among Wood’s ETFs.

In February, Ark held more than 1.7 million shares in a month when Virgin peaked to a record-high. Ark ETFs had boosted their holdings to more than 2 million by May, according to Bloomberg data.

Shares of the Mojave, California-based company were trading 7.55% lower to $24.86 as of 11:35 a.m. ET.

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Bitcoin slips below $38,000 as it struggles to retrace losses despite efforts from Musk and Saylor to buoy confidence

GettyImages 1230566081
Bitcoin’s price has tumbled from April’s all-time highs.

  • Bitcoin struggled to hold onto Monday gains, slipping back below the $38,000-level Tuesday.
  • The cryptocurrency fell despite Elon Musk tweeting that he’d had discussions with bitcoin miners on Monday about energy efficiency.
  • Bitcoin was trading at $37,088 as of 9:17 a.m. ET Tuesday.
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Bitcoin struggled to hold ontop gains made on Monday, slipping back below the $38,000-level Tuesday despite tweets Tesla chief Elon Musk about having discussions with bitcoin miners on ways to lessen the cryptocurrency’s environmental impact.

The world’s largest cryptocurrency popped nearly to $40,000 following that tweet Monday but slipped 7% to $37,088 as of 9:17 a.m. ET Tuesday, according to CoinMarketCap.

Bitcoin could find initial support around the $36,000-level, said Pankaj Balani, CEO at Delta Exchange. A break below that, he said, could signal a correction that is bigger than a short-term pull-back.

Following Musk’s announcement, MicroStrategy founder and CEO Michael Saylor also tweeted that he had formed a Bitcoin Mining Council with industry leaders “to promote energy usage transparency & accelerate sustainability initiatives worldwide.”

These leaders include Blockcap, Hut 8, Marathon Digital Holdings, and Riot Blockchain.

Energy used by bitcoin mining operations is under heightened scrutiny, thanks in part to Musk’s abrupt reversal on May 12 when he announced that Tesla is suspending the purchase of vehicles using bitcoin due to environmental concerns.

The price of the cryptocurrency nosedived immediately after, along with a broader cryptocurrency crash that wiped out 47% of the market cap for global digital currencies in just one week.

The Treasury Departments’ decision on May 20 to have any cryptocurrency transfers of at least $10,000 be reported and China’s reiteration on May 21 that it will restrict mining and trading activities accelerated bitcoin’s plunge.

Bitcoin’s excessive energy use and climate change impact have long been criticized, with experts repeatedly warning about the “staggering” amount of energy required to mine the digital currency.

Yet others, such as Cathie Wood’s Ark Invest said these energy consumption concerns are “misguided.” Ark clarified that it believes bitcoin can accelerate a green-energy revolution and become “a net positive for the environment.”

Bitcoin is 42% lower from its all-time high of $64,107 in April.

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Cathie Wood reiterates $500,000 long-term bitcoin price target amid deep crypto sell-off

Cathie Wood
  • Cathie Wood’s Ark Invest reiterated its view that bitcoin will climb to $500,000 over the long term.
  • Wood spoke with Bloomberg on Wednesday with a bullish outlook for the cryptocurrency, even amid a sharp decline in the space.
  • “We go through soul searching times like this and scrape the models, and yes, our conviction [on bitcoin] is as high,” Wood said
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A 33% decline in bitcoin over the past two days hasn’t shaken Cathie Wood’s confidence in the cryptocurrency, as she reiterated Ark Invest’s view that it will trade to $500,000 in the long-term.

“We go through soul searching times like this and scrape the models, and yes, our conviction [on bitcoin] is as high,” Wood said in an interview with Bloomberg on Wednesday.

Ark Invest’s $500,000 bitcoin price target is predicated on the scenario where all institutional asset managers allocate upwards of 5% of their portfolios to the cryptocurrency.

But the rise of bitcoin to more than $60,000 earlier this year also put a spotlight on its high energy consumption, which is partially powered by fossil fuels like coal and natural gas. This led Tesla CEO Elon Musk to halt the EV manufacturer’s acceptance of bitcoin as a form of payment for its products.

But that thinking around bitcoin and its environmental impact is misguided, according to Ark Invest, as it believes the cryptocurrency will accelerate the adoption of solar and other forms of renewable energy.

As to whether bitcoin continues to move much lower from current levels, Wood admitted that it’s possible.

“You never know how low is low when a market gets very emotional,” Wood said, observing that many traders dumped their position after bitcoin traded below its 200-day moving average around the $40,000 level.

But any further decline may represent a solid buying opportunity, Wood said, as she believes bitcoin has entered a capitulation mode.

“We were looking at all the indicators this morning. They are all suggesting that we are in the capitulation phase, which is a really great time to buy, no matter what the asset is. A capitulation phase is buy, it’s on sale,” Wood said.

Wood’s Ark Invest is taking advantage of the recent decline in cryptocurrencies, as the firm has been buying shares of crypto-exchange Coinbase in several of its ETFs amid the decline, according to ARK’s daily trading report.

Read more: Cathie Wood and her analysts break down the multi-billion-dollar space opportunity – and explain why an infrastructure stock and ARK’s 3D Printing ETF are among the top holdings in their Space Exploration and Innovation ETF

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