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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Robinhood promises to fix ‘the issues’ that outraged customers when it restricted trading in meme stocks

Robinhood logo stocks investing
  • Robinhood CEO Vlad Tenev acknowledged the company angered many customers after it blocked them from trading GameStop and other red-hot stocks.
  • On Saturday, Tenev promised to learn from past mistakes and “ensure they never happen again.”
  • Saturday’s roadshow event comes just days ahead of the commission-free trading app’s hotly anticipated IPO.
  • See more stories on Insider’s business page.

Robinhood knows it angered many retail investors earlier this year when the trading app halted buying of GameStop, AMC, and other meme stocks amid an epic rally – and the company has pledged to earn back the trust of frustrated customers.

In a roadshow event Saturday ahead of its planned initial public offering, Robinhood cofounder and CEO Vlad Tenev said the company is “focusing on is making sure we fix the issues that led to customers being upset.”

The app’s growth has been “amazing,” he said, but “it has led to some real challenges.”

“We’re committed to learn from these experiences and help ensure they never happen again,” he said.

Robinhood drew customers’ ire when it halted the buying of GameStop and other meme stocks during a Reddit-fueled frenzy in January, only allowing users to sell. Outraged traders flooded the app with one-star reviews on Google, lowering its user rating. Many said they would stop using the app in protest, and Redditors on the investing thread Wall Street Bets called for legal action.

Despite the blowback and ensuing regulatory scrutiny, Robinhood, which was launched in 2013 with the mission to “democratize finance for all,” saw a huge jump in new users in the first quarter, according to its S-1 filing. Monthly active users jumped by 6 million in the first three months of 2021 to 17.7 million from 11.7 million at the end of December, an increase of 51%.

The company on Saturday also outlined its plans to continue to grow revenue if US regulators ban payment for order flow, at the heart of its business model. Payment for order flow, or PFOF, is the practice of a brokerage receiving payment from a market maker to send customers’ shares to it. PFOF has drawn criticism from investor advocates who say it encourages brokerages to maximize their revenue at the expense of customers.

The company’s chief financial officer, Jason Warnick, defended PFOF as “a better deal for our customers versus the old commission structure.”

“That said, as we continue to add products and features to our platform we anticipate we will expand the sources of revenues we generate for the company,” he added.

Robinhood said it plans to expand its securities lending business, invest more into Robinhood Gold, its subscription service, and expand internationally. It also said it’s all-in on crypto.

Robinhood’s IPO, planned for Thursday, is among the most highly anticipated of the year. The company will be offering a third of its shares directly to customers through its app, a far greater amount than is usually offered to individual investors during most IPOs. Its livestreamed roadshow was also unique — open to retail investors in what is an event usually reserved for institutional investors.

The Menlo Park, California-based firm in its regulatory filing said it is aiming to raise as much as $2.3 billion in its IPO. It is offering 55 million shares priced at $38-$42, putting its market valuation at $35 billion at the top range.

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Here is what it’ll take to pull bitcoin out of its bear market, according to JPMorgan

Bitcoin
  • The bear market in bitcoin is ongoing as momentum traders unwind their positions, JPMorgan said in a note on Wednesday.
  • The bank is looking for signs of new institutional adoption to help lift bitcoin from its rut.
  • “We believe that the share of bitcoin in the total crypto market would have to normalize further and perhaps rise above 50%” to end the current bear market, JPMorgan said.
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The ongoing bear market in bitcoin is showing no signs of ending anytime soon, JPMorgan said in a note on Wednesday.

The bank is looking for indications that the worse in bitcoin’s price decline may be behind us, but in order to argue that the bear market is over, JPMorgan wants to see bitcoin’s valuation share of the entire cryptocurrency market rise to above 50%.

“We believe that the share of bitcoin in the total crypto market would have to normalize further and perhaps rise above 50% (as it did previously towards the end of 2018) to be more comfortable in arguing that the current bear market is behind us,” JPMorgan explained.

Bitcoin’s valuation share of the entire cryptocurrency market peaked near 70% earlier this year. It currently stands around 46%, according to the bank. Not helping bitcoin is the continued unwind in positions by momentum traders, the bank noted.

Additionally, JPMorgan is looking for increased uptake in bitcoin by institutional investors. And while some institutions like Ark Invest and MicroStrategy have been buying bitcoin in recent weeks, these purchases are not as encouraging as they might appear, according to JPMorgan.

“These institutional announcements are far from encouraging as they do not reflect new entrants, but rather existing investors with a vested interest in propping up bitcoin prices,” JPMorgan said.

Those purchases by ARK Invest have come around the key $30,000 level, which is viewed as an important level of technical support that could dictate the future direction of bitcoin prices. On Wednesday, bitcoin successfully tested that level and surged as much as 10% amid an ongoing discussion amid bitcoin bulls Elon Musk, Jack Dorsey, and Cathie Wood.

Read more: Cathie Wood, Elon Musk, and Jack Dorsey joined forces to discuss bitcoin and tout its use cases to the world. Here’s the full rundown of what they predicted about the future of crypto.

Bitcoin share of entire cryptocurrency market
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Bitcoin rises 10% as Elon Musk, Jack Dorsey, and Cathie Wood gather to discuss the volatile cryptocurrency

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Bitcoin’s surged as much as 10% on Wednesday as Tesla CEO Elon Musk, Square CEO Jack Dorsey, and Ark Invest’s Cathie Wood gathered to talk about cryptocurrencies at The B Word conference.

Musk, Dorsey, and Wood answered a series of questions on cryptocurrencies and addressed a number of pain points associated with bitcoin, including its extreme volatility, intense energy usage, and reliance on fossil fuels and sustainable energy.

The surge higher in bitcoin helped the popular cryptocurrency reclaim a key technical support level at $30,000. As of Wednesday afternoon, bitcoin traded as high as $32,820, well above its Tuesday low of $29,308.

Many technical analysts view bitcoin’s $30,000 level as a make or break level for the cryptocurrency that could lead to significant downside if it doesn’t hold.

Katie Stockton of Fairlead Strategies said in a note on Wednesday that since the $30,000 level is heavily watched by traders, it is prone to a shakeout below that level, also known as a false breakdown. A false breakdown often traps bears below a key support level before surging higher.

So far, that playbook is playing out, with bitcoin breaking the $30,000 level on Tuesday before surging significantly higher on Wednesday.

Stockton sees bitcoin hitting resistance near its 50-day moving average at $35,000, representing potential upside of 8% from current levels. If bitcoin can decisively clear that level, bitcoin would likely gravitate towards its 200-day moving average near $44,000, representing potential upside of 36% from current levels.

Ultimately, bitcoin holding the $30,000 support level is instrumental for bitcoin bulls as they look to stem the significant bleeding in the crypto space that has occurred since bitcoin topped out near $65,000 in mid-April.

Read more: The head economist at a blockchain fintech firm names 2 of the most promising crypto SPAC deals on his radar – and explains why blank-check companies can be better alternatives to buying cryptocurrencies

Bitcoin price chart
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The stock market’s fear gauge spikes the most since February as the S&P 500 tests a crucial technical level

trader nyse
A trader works during the Fed rate announcement on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2019.


A 2% decline in the stock market on Monday sent Wall Street’s fear gauge soaring the most since February as investors grow concerned about the spread of COVID-19’s Delta variant.

The Volatility Index, also known as the VIX, soared as much as 34% on Monday to above the key 20 level, which is often monitored by CTA and Quant funds as to when to add or remove leverage from their portfolio and in-turn buy or sell stocks. Monday’s move in the VIX failed to outpace the fear gauge’s 46% surge on February 25.

The move higher in volatility comes as the S&P 500 tests a crucial technical support level that could determine the future direction of stock prices. The stock market’s 50-day moving average stood at 4,239, just below the S&P 500’s price of 4,242 at time of publication.

Moving averages are a lagging trend-following indicator that technical analysts use to smooth out price movements and help identify the direction of the current trend in place.

Traders view the the 50-day moving average, which is the average daily closing price of a stock over its previous 50 trading sessions, as a short-term moving average that often represents areas of support or resistance for a security.

If the stock market notches decisive and consecutive daily closes below the 50-day moving average, investors will likely look to the 200-day moving average as the next key support level. The 200-day moving average for the S&P 500 currently sits at 3,894, representing potential downside of 8% from current levels.

Conversely, if the S&P 500 is able to decisively close above its 50-day moving average, that would tee the market up to retest its record highs made last week at 4,393, suggesting potential upside of 4% from current levels.

Year-to-date, the S&P 500’s 50-day moving average has successfully acted as support five separate times amid market sell-offs.

Technical analyst Katie Stockton views the current sell-off as a “healthy pullback” that could represent a solid buying opportunity for investors.

“I would be looking for opportunities to add exposure (and, cover shorts) in the coming days assuming the signal gives way to stabilization,” Stockton told Insider on Monday.

Meanwhile, Fundstrat’s Tom Lee thinks stable bond yield spreads suggests that the stock market won’t stage a deeper sell-off, and that the rising fears of COVID-19’s Delta variant set risk assets up well for a rally in the second half of 2021.

“We don’t expect this period of chop to lead to a larger 10%-like decline for markets. Sure, a 3%-5% sell-off, even to S&P 500 4,100 is possible,” Lee said.

The S&P 500 is currently down about 4% from its record highs reached last week, and is up about 13% year-to-date.

S&P 500 stock chart
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The latest stock sell-off is a ‘healthy pullback’ and investors should refrain from panicking, according to one technical analyst

NYSE Trader
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 9, 2020.

  • The ongoing sell-off in the stock market represents a “healthy pullback,” technical analyst Katie Stockton said in a note on Monday.
  • The S&P 500 is down about 3% from its record high, with losses accelerating in Monday’s trading session.
  • “We think the pullback will be short-lived, maturing later this week,” Stockton said.
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A sell-off in US stocks accelerated on Monday, with the S&P 500 falling as much as 2% amid investor concerns about rising COVID-19 cases due to the Delta variant.

But technical analyst Katie Stockton of Fairlead Strategies views the sell-off in stocks as a “healthy pullback” that will likely be short-lived and could present a buying opportunity, according to a Monday note.

The S&P 500 fell below its 20-day moving average on Monday for the first time since June, when a four-day pullback took hold in the market.

“But we think [this] pullback will be similarly short-lived, maturing later this week with the McClellan Oscillator and daily stochastics having already fallen to levels associated with the June low,” Stockton explained.

The McClellan Oscillator measures market breadth, which has been deteriorating in recent weeks as mega-cap tech stocks like Apple and Amazon led the market higher. Meanwhile, the Stochastic Oscillator is a momentum indicator that helps identify overbought and oversold levels of a specific security.

Stockton sees support for the S&P 500 at its 50-day moving average, which sits at 4,240 at time of publication. So far, that support has held, with the S&P 500 hitting an intra-day low of 4,239.82 before paring its losses.

“I think the market is getting flushed out here,” Stockton told Insider, adding that she is seeing lots of extremes in certain market indicators. Stockton said the S&P 500 e-mini futures flashed a DeMark “13 buy” signal, which hasn’t occured since June 21.

“I would be looking for opportunities to add exposure (and, cover shorts) in the coming days assuming the signal gives way to stabilization,” Stockton said.

Stockton isn’t alone in thinking that the current sell-off in stocks may be limited. Fundstrat’s Tom Lee argued in a note on Monday that the COVID-19 Delta variant represents “more bark than bite” and that the current sell-off sets stocks up well for a rally in the second half of the year.

S&P 500 futures stock chart
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Robinhood plans to raise as much as $2.3 billion in its upcoming stock-market debut

Robinhood logo displayed on a phone screen and representation of cryptocurrencies are seen in this illustration photo taken in Krakow, Poland on June 29, 2021

Robinhood is aiming to raise as much as $2.3 billion in its upcoming stock market debut, the company said in a filing with the Securities and Exchange Commission on Monday.

The popular investing app said it’s offering 55 million shares priced at between $38 and $42 each during its roadshow. At the top end of that range, Robinhood could have a market valuation of $35 billion.

It plans to list on the Nasdaq under the ticker symbol “HOOD” and is expected to go public by the end of next week. Under its new program to “democratize” IPOs, Robinhood plans to allocate 35% of its IPO shares to retail investors, The Wall Street Journal reported.

If it hits $101.50 per share in the next four years, cofounders Vlad Tenev and Baiju Bhatt could receive up to $1.4 billion worth of Robinhood stock each, an SEC filing from June said.

Robinhood, which counts 17.7 million monthly active users, holds $81 billion in assets under custody, its filing says. It also says it has 22.5 million funded accounts, or those tied to a bank account, up from 18 million in the first-quarter this year, far above the 40,000 accounts it counted in 2014.

Revenue for the first quarter of 2021 came in at $522 million, up from $128 million in the same period last year. The company expects to report second-quarter revenue in the range of $546 million and $574 million, marking a 129% jump from the $244 million made in the second-quarter last year.

Robinhood was valued at $11.7 billion in a private fundraising round late last year. But based on trading in the secondary market, Bloomberg Intelligence analyst David Ritter had previously estimated it could be worth as much as $40 billion.

Goldman Sachs, Barclays, Citigroup, and JPMorgan are the lead underwriters on Robinhood’s IPO, among other banks.

Read More: Memeification vs manipulation: The creator of a site designed to find meme stocks shares how to track Reddit momentum and find frauds – and lists the 9 meme stocks with the most loyal fanbases

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A big sell-off in the stock market is unlikely for these 2 reasons, according to Fundstrat’s Tom Lee

Tom Lee
  • A large sell-off in the stock market is unlikely for 2 key reasons, Fundstrat’s Tom Lee said in a note on Monday.
  • Recent weakness in stocks can be largely attributed to rising COVID-19 cases, according to Lee.
  • “July chop ultimately a great set-up for risk assets to rally in 2H2021,” Lee said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Recent weakness in the stock market will likely be short-lived and won’t extend into a large decline for two key reasons, Fundstrat’s Tom Lee said in a note on Monday.

The stock market saw a steep drop to start this week, but Lee is maintaining a bullish outlook on steady bond yield spreads and a stable VIX term structure, according to the note.

Bond yields being stable relative to Treasuries is a positive signal for stocks, while the VIX term structure usually inverts when a correction looms. Right now, the VIX term structure, which is the difference between four-month and 1-month VIX contracts, remains flat, according to Lee.

As of Monday morning, the S&P 500 is down nearly 3% from its record high. According to Lee, the decline is tied to the recent uptick in daily COVID-19 cases due to the fast-spreading Delta variant among unvaccinated individuals.

But the rising COVID-19 cases represent more bark than bite, according to Lee, who doesn’t expect the decline in stocks to extend into a meaningful sell-off.

“We don’t expect this period of chop to lead to a larger 10%-like decline for markets. Sure, a 3%-5% sell-off, even to S&P 500 4,100 is possible,” Lee said.

Instead, Lee expects the current weakness in stocks to ultimately be “a great set-up for risk assets to rally” in the second half of 2021, especially as the ongoing rise in COVID-19 cases likely peaks sometime in August, according to the note.

“If India saw cases peak within 4-6 weeks from initial surge, we expect USA, UK and Israel to see similar trajectories,” Lee explained.

To take advantage of the potential rally in stocks later this year, Lee suggests investors focus on buying epicenter stocks that are poised to benefit from the ongoing reopening of the economy, as well as mega-cap tech stocks.

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Moderna spikes 11% to record highs after it is selected to be added to S&P 500

Trader NYSE green

Moderna jumped as much as 11% on Friday after it was selected to be included in the S&P 500 index.

The mRNA biotech platform hit record highs and eclipsed a $100 billion valuation for the first time ever on Thursday. Moderna has seen an ongoing surge ever since it announced successful COVID-19 vaccine data late last year.

Moderna will replace Alexion Therapeutics in the market-cap weighted index. Alexion is being acquired by AstraZeneca, pending final closing conditions.

Given Moderna’s current market valuation of about $112 billion, the company will have a 0.30% weighting in the popular US Large Cap index. The S&P 500 index switch will occur just before trading on July 21.

Shares of Moderna are up 167% year-to-date. The move higher comes as Moderna works to develop a COVID-19 booster shot that would give recipients increased anti-body protection to the coronavirus disease and its variants.

Part of the rise in Moderna this year is also based on investors giving more value to the company’s mRNA technology platform, in hopes that it could successfully prevent other viruses like the common cold and certain cancers.

Moderna stock chart
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Moderna spikes 8% to record highs after it is selected to be added to S&P 500

Trader NYSE green

Moderna jumped as much as 8% on Friday after it was selected to be included in the S&P 500 index.

The mRNA biotech platform hit record highs and eclipsed a $100 billion valuation for the first time ever on Thursday. Moderna has seen an ongoing surge ever since it announced successful COVID-19 vaccine data late last year.

Moderna will replace Alexion Therapeutics in the market-cap weighted index. Alexion is being acquired by AstraZeneca, pending final closing conditions.

Given Moderna’s current market valuation of about $112 billion, the company will have a 0.30% weighting in the popular US Large Cap index. The S&P 500 index switch will occur just before trading on July 21.

Shares of Moderna are up 167% year-to-date. The move higher comes as Moderna works to develop a COVID-19 booster shot that would give recipients increased anti-body protection to the coronavirus disease and its variants.

Part of the rise in Moderna this year is also based on investors giving more value to the company’s mRNA technology platform, in hopes that it could successfully prevent other viruses like the common cold and certain cancers.

Moderna stock chart
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