Cathie Wood, an investor who has become a market darling, claims that the stocks held by her Ark Investment Management ETFs are not at frothy levels but that "benchmark" stocks are.
She's most likely referring to technology behemoths Meta Platforms (Facebook) and Google as a benchmark (FB) Google (GOOGL) - Get Alphabet Inc. Class A Report, Amazon (AMZN) - Get Amazon.com, Inc. Report, Apple (AAPL - Get Apple Inc. Report and Microsoft (MSFT) - Get Microsoft Corporation Report are just a few of the companies you can get your hands on.
Tesla TESLA, Coinbase Global COIN, Teladoc Health TDOC, Roku ROKU, and Zoom Video Communications ZM are the top five holdings of Ark's benchmark Ark Innovation ETF ARKK is traded on the NYSE.
"We are not living in a bubble," Wood said in an interview with CNBC. "If we were in the air, our strategies would be taking off. I believe that we have not yet begun to recognize and reward innovation for what is about to take place. Consequently, this is where our conviction stems from. The benchmark stocks are where the bubble is."
According to the company, Ark Innovation has experienced a 20 percent decline this year and an 11 percent decline over the past 12 months. However, it has increased by 98 percent in the last two years and by 41 percent on an annualized basis over the past five years.
Disruptive innovation is the focus of Wood's career. Moreover, "the other side of [it] is creative destruction, and we do believe that traditional benchmarks are where that's going to take place," she explained further.
According to Wood, the most vulnerable stocks this year are those in the financial and energy sectors.
Morningstar analyst Seth Goldstein believes Tesla is overvalued and believes its fair value is $680. It was trading at $1,096, down 4% earlier this week.
Tesla is expected to become one of the top five automakers in terms of annual vehicle sales, as well as a success in launching its high-margin autonomous driving software subscription service, according to an article published last month by Reuters.
"Tesla's success in becoming a top-10 automaker remains our base case," says the team.
