5 Investment Opportunities, Cathie Wood serves as the CEO of Ark Invest, an investment company that manages several exchange-traded funds. Wood has amassed a loyal following of futuristically-minded investors by focusing on “big concepts” such as Artificial Intelligence, Gene Editing, and space exploration. That’s why you’re here: You’re looking to find out what stocks are changing the world and therefore are at the very least 700% upside in the words of Wood.
These are five investment opportunities to consider: Zoom Video Communications (NASDAQ: ZM), Roku (NASDAQ ROKU), Bitcoin (CRYPTO: BTC), Block (NYSE SQ), and Tesla (NASDAQ: TSLA). Ark Invest and Wood have price targets for each of these, which range between 700% to almost 6,000% in the case of Bitcoin.
Wood’s perspective on the five investment options is precious. The Ark Invest team Ark Invest actively researches its leading ideas and then distills those results for us. It’s an excellent tool.
There’s one essential aspect that needs to be added to the tool. This is the one thing that could make or break your career as an investment analyst. But don’t worry, I’ll explain which of these suggestions is the most attractive investment currently. However, I hope that you walk through this article in a position to make that decision for yourself.
Here’s the reason Cathie Wood is a fan of these five suggestions
The bottom line is that Cathie Wood’s an investor like us. If you want to decide to invest (not invest in something, not), it’s essential to come up with an investment thesis which is a concise idea of what’s going to occur shortly that could make your investment go up.
Here are Wood’s prices goals for the five investment options. But, Wood should have given these price targets as if they were in the presence of. Each price target came along with an investment thesis which is the most crucial aspect for investors. Here’s a quick synopsis of each:
Zoom price goal: $1,500 per share in 2026. Over the next three to four years, Ark Invest believes that Zoom’s user base could double or more. It also believes that the annual revenue for each user could double or more. The exponential growth in the top line will mean higher profit margins for the business. As long as the stock price remains at the same level today, it will result in substantial shareholder returns.
Roku pricing target 605 shares per share in 2026. Over the next three to four years, the number of the active account on Roku could double or even quadruple. Additionally, Roku users will be streaming more video content than they do at the moment. The vast and engaged audience will enable Roku to charge higher ads, leading to an outsized increase in revenue. Similar to Zoom, Ark Invest believes this revenue growth will improve the company’s profits and propel the stock up.
Bitcoin’s price goal is 1 million dollars for each coin in 2030. The market value of Bitcoin is tiny compared to asset classes such as gold, real estate, or bonds. However, Wood believes that many factors could change this, such as the following that more people will utilize Bitcoin to store value, nations will have the equivalent of Bitcoin in their Treasury accounts, large corporations will add the cryptocurrency to their financial statements, and people of all ages will use it for money for example, as an instrument of payment for transactions in the financial sector. This growth will push the worth of each coin to $1 million.
Block cost targets 500 shares per share in 2025. Ark Invest sees an incredible general trend in motion in the present: people are leaving traditional banks and turning to Fintech options like Block. The investment firm thinks that Block’s Cash app will be one of the main factors that will drive Block’s business in the next couple of years. It is not just predicting significant growth in users who are active in the Cash App customers; however, also believes that Block will be able to make money from users more efficiently. This is a significant source of shareholder profits, but Ark Invest does see potential upside in its crypto and Square ecosystems.
Tesla’s Price target is 4600 shares in 2026. By 2026, Ark Invest expects Tesla’s annual earnings from sales of electric vehicles to be a factor in size (10 times) higher than it earned in 2021. In addition, it anticipates the company to make more than $100 billion with its ride-sharing service, which still needs to be created. This will enable its net margin to increase by more than a quarter in the coming years, resulting in greater profits and an increase in share price.
Wood might be incorrect regarding a lot of these theories. But let’s get this straight now: Long-term investment is founded on a fundamental analysis similar to the one above. It’s not based on the lines on a graph or graphs but rather on actual changes that occur in real life.
If you decide to purchase any stock, you need to articulate clearly the things you think are likely to happen and how to help your investment grow in value. Ark Invest does that.
The Wall Street debate
For anyone who wants to learn something from Wood’s research on investment, my first recommendation is to discard the price targets for each. Begin to dissect Wall Street’s views by studying the basic assumptions.
A significant omission from the five investment thesis mentioned below is the healthy amount of optimism — what could be wrong. It’s an essential trait you should learn to develop to be a balanced investor. It is necessary to see the two sides of an argument.
For example, For instance, ArkInvest’s investment strategy for Roku is currently on the right track. For the quarter ending in March 2022, Roku boasted 65.4 million active users, an increase of 16% over the previous year. This means it’s growing its user base, as Ark Invest hopes. The hours of streaming per user also increased in the third quarter, which is a different aspect of the investment theory.
However, the company’s profit margin isn’t growing at faster dimensions, and there’s evidence to suggest that this downward trend will continue. Roku’s hardware products are more expensive to manufacture than the price it is in a position to sell them at. In Q3, Roku announced the launch of Roku Smart Home, which will bring into an entire line of hardware devices sold at a low price, reducing the company’s profits. This failure to earn money could dampen the estimated 1,000% increase implied by Ark Invest’s price goal.
Also, it could be too optimistic to anticipate more than $100 billion of revenues for Tesla from an industry segment that isn’t even in existence. If it launches shortly, it will almost certainly bring this essential element to Ark Invest’s $4,600 per share price goal.
At the final point, I’d be able to make gaps in the investment thesis by Ark Invest for all five of these concepts, even though I own four of the ideas. I appreciate Wood’s and others’ viewpoints, as there’s always something new to offer on the scene. It’s nevertheless beneficial to consider both sides of the debate before making decisions.
If you’re not reading further, this should be your primary takeaway. Refrain from letting someone else’s price targets motivate you to purchase. Always think about what could happen and what could be wrong before investing.
What is it that makes Zoom stock distinct from the other stock
If you’re still here, I’ll fulfill my promise and explain why I feel Zoom shares are the most attractive option of the five. But before we get into the caveat, there’s no chance it’ll reach Ark Invest’s price goal of $1500 per share in 2026. This is fine with me since it can still beat the market.
Many investors believed that the importance of Zoom would fade as COVID-19 restrictions were eased. They’re right. Zoom can track revenue from consumers in its online division. The income from its online segment has decreased throughout its fiscal 2023 (which typically lasts until the end of 2022’s calendar). Management expects an increase of 8% across the entire year for this segment of its business.
But, Zoom’s enterprise business continues to grow and is responsible for more than 50% of the company’s revenue. This will likely be the primary driver for value over the next few years.
The ancillary products of Zoom feature a customer-centric approach to business. Zoom Phone looks to upgrade the internal phone system in offices. Zoom Rooms are modernizing conference rooms. The newly introduced Zoom Mesh is a content delivery network designed for businesses that increases the speed of internet connections.
At the beginning of the fiscal year 2023’s first quarter, Zoom’s research and development (R&D) expenditures more than tripled from the same period in fiscal 2022. But, developing new services for customers in the enterprise sector is essential. While it is paying more, the business is still profitable.
These R & D investments will eventually pay off for Zoom by reviving revenue growth from its loyal and loyal base of enterprise customers. As I said, I expect something more than $1500 per share. But, over the long term, returns that beat the market are possible. However, it is essential to research the opposing argument to my own before deciding to invest in Zoom stock.