Arm, which is based in Cambridge and owned by Japan's SoftBank, had its Initial Public Offering (IPO) on the Nasdaq exchange in New York on Thursday, with each share going for $51 and giving the company a market value of almost $60 billion. The hype surrounding the IPO has since faded, with the stock value going down each day, closing on Tuesday at $55.17.
Wood declared that she did not partake in Arm's high-profile IPO last week since she concluded that the British chip designer was priced too highly in comparison to its competition. Arm, held by Japanese conglomerate SoftBank, was issued on Nasdaq at $51 per share, leading to a $60 billion valuation. The stock then rose 25% to end the day at $63.59 but has decreased since and is now at $55.17. Speaking on CNBC's "Squawk Box Europe" yesterday, Wood said that the focus on AI regarding Arm is too much and not enough attention is paid to the competitive context. She maintained that innovation is not adequately valued, particularly with AI making such vast opportunities available.
We opted not to invest in the IPO, and we assessed it in relation to the other assets in our portfolio. Our opinion was that the valuation of Arm was high, yet there are stocks with greater exposure to AI at lower prices among our investments. Wood's ARK Innovation ETF is comprised of Tesla, Shopify, UiPath, Unity, Zoom, Twilio, Coinbase, Roku, Block and DraftKings. The fund experienced a significant dip with the US Federal Reserve's recent string of rate increases, however it has since regained popularity as investors are drawn to stocks with AI exposure. Wood said that the expectation of a slowing in the rate hikes will further encourage this trend. "Individuals and analysts are starting to look ahead and anticipate that the hikes are soon to peak and that is driving interest in the innovation space," she commented.
Wood declared that, with inflation declining in major economies and central banks likely to start reversing their tightening monetary policy in the upcoming year, "it should be a great atmosphere for creation and global megatrend strategies." ARK Invest acquired UK-based thematic ETF provider Rize ETF for £5.25 mil ($6.5 mil) on Wednesday, which is their first move into the European passive investment market. Wood explained that even though Europe made up 25% of ARK's research demand since 2014, they have not been able to invest in the company's ETFs in the US until now. "The price of technology, namely AI, is decreasing, making it easier to design and expand tech companies around the world. It is no longer exclusive to Silicon Valley," Wood stated. "We have a positive outlook on the possible growth of technologies in Europe and all over the world."
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