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Cathie Wood Explains Why She Skipped the Arm IPO Hype

Lanon Wee

Arm Holdings, based out of Cambridge and controlled by the Japanese heavyweight SoftBank, was put up on New York's Nasdaq stock exchange on Thursday with an IPO cost of $51 a share, which gave it an assessment of almost $60 billion. After the initial enthusiasm, the stock experienced consecutive drops day by day and ended Tuesday's trading round at $55.17. Wood stated that she did not take part in Arm's IPO last week as she believes the British chip designer was priced too high in comparison to its competitive advantages. Arm, owned by SoftBank, debuted on the Nasdaq exchange with a $51 price per share, making it a $60 billion corporation. Prices rose on the first day by around 25%, yet have fallen each day following, and ended Tuesday's session at $55.17. Wood stated on CNBC's "Squawk Box Europe" that the attention given to AI-related companies appears to be well-deserved due to the expansion that AI is creating. She opined that Arm was receiving too much focus with regards to AI, with not enough attention on the competitive environment. We decided not to join the IPO; from a valuation standpoint, we believe Arm came out on the high side. Within our portfolios, we have names with more potent AI exposure at much lower prices. Wood's ARK Innovation ETF contains Tesla, Shopify, UiPath, Unity, Zoom, Twilio, Coinbase, Roku, Block and DraftKings. After a slump due to the high rates of interest imposed by the Federal Reserve, the ARK ETF has seen a resurgence, as those with an appetite for innovation have directed their focus away from the hikes. Wood predicts this shift will sustain the trend. "We are now looking towards the other side, away from the heavy interest rate hikes of the past year," she said. Inflation declining across major economies and central banks slated to start reversing their intense monetary policy tightening in the following year has led Wood to opine that this upcoming period should be extremely beneficial for innovation and global megatrend strategies. On Wednesday, ARK Invest acquired Rize ETF, a British thematic ETF issuer, for £5.25 million ($6.5 million), which is the company's first forray into the European passive investment sector. Wood commented that Europe lacked the opportunity to invest in the U.S.-based ETFs of ARK Invest, despite them accounting for around 25% of the company's research demand since its launch in 2014. He went on to add that the cost of technology, specifically with the application of AI, has been decreasing substantially, allowing technology to develop and spread far and wide, no longer exclusive to Silicon Valley. Wood concluded by expressing how ARK Invest is open to ideas and technologies flourishing in Europe as well as other parts of the world.

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