ARK Invest CEO Catherine Wood is an outspoken proponent of Tesla Inc. TSLA.
“I’m probably the most trolled portfolio managers on the internet, certainly when it comes to Tesla,” she told Benzinga during a recent one-on-one conversation on the sidelines of the Forbes 30 Under 30 Summit in Detroit.
Her success speaks for itself; against the advice of many, Wood said she was the first to buy Amazon.com, Inc. AMZN at her portfolio AllianceBernstein, a New York-based global asset management firm.
“It was at like a $5-billion market cap. We bought it there and I announced our trade at the weekly general session. People literally laughed,” she said.
“Of course — you know — it was never going to make money. Walmart Inc WMT and Costco Wholesale Corporation COST were going to kill it.”
The driver for Wood's decision to buy Amazon stock decision was a passion for innovation and disruption, something she said she inherited from her time at Jennison Associates, a firm whose founder was an early tech analyst.
Core Focus: Innovation Platforms
During Wood's conversation with economist Robert Shiller at the recent Forbes 30 Under 30 Summit in Detroit, she said her investments stem from five key innovation platforms:
- DNA sequencing.
- Collaborative robots.
- Energy storage, such as electric and autonomous vehicles.
- Artificial intelligence.
- Blockchain technology.
Of those platforms, Wood filters prospective investments for the following:
- Broad-based innovation that cuts through global economic sectors.
- A declining cost curve.
- A launching pad for further innovation.
Tesla is a prime example of a promising investment, Wood said.
3 Reasons Why
Wood names the following reasons for her $6,000 Tesla price target:
- Battery costs.
- Artificial intelligence.
- Autonomous driving data.
Tesla is riding down the cost curve put in place by cell phones and laptops, destroying the fallacious belief that new battery technologies, such as those introduced by Porsche’s Taycan, will put Tesla at a disadvantage, Wood said.
“We did an analysis of the Taycan on every important metric to EVs. It loses to Tesla by a lot.”
One such metric is battery costs, she said.
“They’re using lithium-ion, pouch batteries — completely new [and] just for electric vehicles. Tesla’s battery costs are much lower and will be for the foreseeable future.”
Her second reason: artificial intelligence chips for autonomous vehicles.
In the spring, Tesla unveiled an in-house A.I. chip with built in self-driving and redundancy capabilities.
Wood works with an analyst who previously was at NVIDIA Corporation NVDA, which she said will be "the" AI chip company.
That analyst said Tesla's AI chip is "four years ahead of anything that Nvidia can put in cars."
The third reason: autonomous driving data.
“Tesla has 10 to 12 billion miles worth of real-world driving data, whereas Waymo has a lot of simulated data, but that doesn't count. Real-world driving data, they have 15 to 20 million.”
Tesla and Waymo are the leaders in the autonomous driving space, Wood said.
The major difference between the two, in her view: Tesla prioritizes real-world data, while Waymo uses powerful computer simulations to evolve its self-driving technology and capabilities.
Trade Ideas: Buying The Dip, Playing With Options
When Tesla went through a drawdown early 2019, Wood’s fund increased its holdings, making it the largest stock in the portfolio by a factor of 2.
“We bought it when it got into the $180s, up to 10% of the portfolio.”
Wood told Benzinga she has January 21 long calls with a $420 strike price.
Photo courtesy of Tesla.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.