Ark Investment's Cathie Wood Talks ARKW, TikTok's Future

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Joining our conversation now is Kathy Woods. She is the Arkaves CEO and CIO. Kathy, you're with us for the whole show, which is a real luxury. And I want to start with crypto because it's day three of Donald Trump's second administration. We've heard a lot about immigration, AI and tariffs just in those three days.

Not as much about crypto just yet. What do you make of that?

Oh?

I think he is very committed to crypto. Actually, what happened the night before his inauguration, I think he launched some meme coins and that caused quite a stir in the crypto community. He's also named Paul Atkins to be the SEC Commissioner.

He is pro crypto.

Senator Lummis has said that she's looking forward to the Atkins diet are under at Kins as he becomes the SEC Commissioner and really regulates digital assets.

The way they should be regulated.

And so, Kathy, let's talk about this just because it just happened. A filing came in. It had ETFs that will track dosee, Trump coin Bonk along with some other ones, and it was a forty Act filing. Which would use the Kman subsidiary move. You know this is going to be either approved or denied in seventy five days. Do you see the SEC being like totally liberal letting all this stuff through or do you think they will draw a line somewhere?

I think the SEC is going to be prudent, But in terms of liberal, I think that as long as the sponsors are following the forty Act laws, that they will allow many of these new products.

Yes.

So, speaking of new products, you mentioned the trump coin. I want to get your as someone who sees a lot of value in crypto, what do you think is the best way to understand trump coin? Given that there's no intrinsic value, what purpose does it serve beyond as an advertising advertisement marketing tool for him?

Yes, it is a it's a meme coin. In twenty seventeen, we went through the ico movement, which was very much if you remember, crypto Kitties started a movement back then in icos.

This is part of the meme coin moment.

Isn't going to have any utility we shall see.

I mean, there are there.

Is speculation that you know, you'll get to meet President Trumpez, one of the utilities.

Of owning this coin.

I don't know if that's the case or not, but so far we don't know of much utility for this coin except that it is a mean coin of President Trump himself in the early days of I think he's ushering in the next phase of the crypto revolution.

Well, Kathy, with all that in mind, would you buy trump coin or or do you generally stay away from the meme type coins.

Yeah, we've pretty much stayed away from the meme coins.

Uh. You know, we're very focused on the big three.

So Bitcoin, uh and as you know, ar kb is one of the larger spot bitcoin ETFs out there. Happily uh, Ether and Solana in in our private funds.

So those those we believe are the big three.

And then we think that the decentralized financial services movement some people call it DeFi or Internet financial Services or even finternet. We think that is going to be big. That's very Ethereum and Solana based. And so there are some uh there, there are some crypto assets that are providing great utility for that movement.

Kathy, I just want to ask one final question here on trump coin. Do you share the concerns of some in the crypto industry that perhaps this reinforces the worst part of the industry, that it's a mockery of serious tokens.

You know, it's interesting.

And Chris Berniski, who was our first crypto analyst, now we would call that digital assets analysts, he made a comment on Excess Weekend that I think is true that the ic Ico movement in twenty seventeen really brought this new technology, or at least curiosity about this new technology to.

A whole new group of people.

And while you know, some in the traditional crypto world considered it, I think he used the word cringe or something like that, it really did open a lot of eyes, and we were it.

Did usher in that year.

We had I think, if I'm not mistaken, Bitcoin went from one thousand to twenty thousand as part of this movement. This is a lot like the early days of the Internet, and we lay it a lot of fiber right, a lot of money and eyeballs attracted at that time. And yes, some of that buyer beware, some of that ended badly or ended badly for many years, but it really did spawn a very important movement in technology, and we think the name is true here.

Kathy, let's move on to Trump's second term. Here. Obviously, stocks have had a great run the past two years. He generally has seen as bullish for stocks. But then there's tariffs. You're running all these funds, You've got stocks to buy and sell. What are you doing differently now that he is fully in office.

Well, we are doing what we've always done, which is investing in truly transformative innovation across sectors, so.

That we have not changed at all.

There is a meme out there going around which is very interesting and unfortunately in these momentum driven markets, perhaps.

More true than we would have liked.

If you look at the beginning of the last administration, that was our peak, the peak in innovation, and we went through, as did everybody, a bear market hit disproportionately, and we had been underperforming until it seems the idea that we were going to have a new administration started moving into the market. So when you say the market has been very strong, sure yes it has, but it has been very concentrated to a very few names. In fact, if you use a Goldman study, it has never been

In GDP, is this company going to survive?

We were more concentrated than that, so I would say even though the market did hit all time highs, it was powered by very cash rich companies. And there has been a lot of fear out there, and I think what the new administration is doing is changing fear into optimism. And you know, with deregulation, I think that's highly underestimated how important deregulation is going to be to unleashing animal spirits.

So we're pretty excited about this.

And yes, our strategies are starting to break out.

I don't know if it's momentum or not. We haven't changed what we're doing.

We think these companies are going to transform the world. They're just now being recognized a little bit more. But that now that risk appetite is picking up a bit.

Focus here on private assets and Kathy, you of course have a ARC venture fund that invests in private companies and among those holdings are a couple of names that are familiar to everyone. SpaceX, Epic Games, open Ai, Anthropic. I want to ask you about open Ai because following yesterday's announcement with SoftBank and Oracle forming this joint venture within an initial investment of one hundred billion dollars, that company,

Well, yes, we have a nice exposure now.

And you know, it's interesting to have watched that announcement because we know how close Elon Musk with his XAI is to President Trump. And I think what President Trump do is doing here is spreading the wealth.

I mean, there are some very.

Innovative companies who are going to accelerate this ai AH, which in itself is moving at an incredible pace, a pace that we've never seen before.

What we're acquainting stargate to you.

So this is the five hundred billion dollar project is to the building out of the highway system in the United States. If you look back and put that investment into twenty twenty five dollars, it's roughly.

The same amount.

So these are the digital highways that are going to transform everything. They're going to transform everything and really accelerate GDP growth in a way that I think most people.

Do not participate. Understand right now.

And let's talk a little bit about rappers. Of course, we're talking about the ARC Venture Fund. It's a closed end interval fund because you can't yet directly put private private companies, private bonds, private credit in into an ETF. You have seen some filings come through to that effect that you think about what State Street is trying to do with Apollo, for example. I haven't yet seen private assets ETF filing come from ARC, though.

Is that something that you're potentially thinking about?

Well, right now, we're very happy with the interval fund structure.

So this is a forty act fund as well.

An interval fund allows daily inflows and quarterly redemptions up to five percent of nav That seems to be a better wrapper. I would think for these public private funds. Roughly eighty percent of our interval fund is private, twenty percent is public, so that we can allow for redemptions. And I think the most important thing about this interval fund, as would be true of an ETF, of course, is

So we're pretty excited about this wrapper.

Kathy, Just to push back on that a little bit, there's this ETF called x XOVR, the er shares public private crossover. It was basically an ETF living in oblivion doing an active strategy. It changed its focus to add a little private Fifteen percent of the stock of the ETF is now SpaceX. Since it did that in December, the flows of just came have come in gangbusters. It's now double your venture fund, which has been around for longer.

People just prefer that rapper.

Does that concern you at all?

I mean it doesn't concern me.

I think the more access to innovation anyone offers, the better for our markets and the better for our competitive positioning around the world.

So it doesn't bother me. It doesn't mean we won't do it ourselves.

And I will tell you that mutual funds, many mutual funds have allocated fifteen percent of their portfolios to private companies as well. They don't disclose their holdings at the end of every day like ETFs do, so maybe they don't get as much publicity, but this has been done before, and I think as more and more people understand what our fund is and the kind of access we do have to these incredible ideas, I think there's a place for both.

So, Kathy, people call this the Trump two point zero ETF Toddstone.

Of course, do you agree with that label? Do you think that makes sense?

Well, I think this administration is going to be incredible for innovation, so I'm definitely not going to find that.

The only thing I would add is.

The flagship strategy A RKK includes the space, the innovation space that has been hit the hardest, was hit the hardest by regulation and a lack of M and A, and that was what we call the multiomics or genomics space that we think is.

Going to have.

We're going to see the most profound implications of artificial intelligence in that part of the market. So when it comes to AI, we think that the biggest application in the next five to ten years is Robotaxi's autonomous taxi platforms. The most profound is curing disease. That's what you would see.

Okay, so a rethink on that front. Also rethink when it comes to what's going to happen with TikTok. It's still not clear the future of this social media company, but we do know that President Trump is open to Elon Musk or Larry Ellison buying it in concert with the US government. Is this something that you would, if it's publicly traded, want to buy for RW.

Well, of course, we look at the valuation as always and see if during the next five.

Years it were we believed it would.

Appreciate at more than a fifteen percent compound annual rate of return per year. So we know there are a lot of bidders out there, a lot of people very excited about TikTok.

And we understand why. We just want to see the valuation.

It is one of the most important social media companies of our age.

All Right, Kathy, I have a request question from James Seyfert on my team. Of all your individual strategies, including AARKK, what do you think has the best setup right now?

I think the most underestimated is ARKG and the reason for that is regulatory rethink altogether of what we're doing in healthcare, but as important for G and for a lot of our other names. You know, the lack of M and A over the last four years has been a very big problem.

There has not been price discovery.

What will a strategic buyer pay for these assets because they weren't allowed to buy them. Now, if you look at biotech of pharma, I think that four hundred billion dollars of revenue, thirty percent of the space is going to go off patent in the next five years.

Our companies will fill that space, but.

They were not allowed to be acquired by and therefore we had no price discovery, right, that is change?

All right, Kathy, We have about a minute left with you, and you mentioned M and A. Something we're also waiting for is for IPOs to come back. And you think about the innovative companies that you care about, a lot of them just aren't going public.

The extreme example would.

Be SpaceX, but also down in the small cap space as well.

What do you make of that? Do you think that's going to change?

I hope so.

I do think regulatory changes will go a long way towards bringing back public markets. I think the number of stocks in the public markets has been cut in half in the last twenty twenty years. And I understand why companies want to stay private. The regulatory quagmire that they enter in the public markets is really a lot of friction. And there's another reason, I would say, and that is in the private markets there is a longer time horizon than there is in the public markets today. But I

All right, Kathy, So great to get so much time with you. Hope to speak against him. Our thanks of course to Kathy would of ARC invest