Ahead of Tesla’s Results, Cathie Wood Says Wall Street Is Mistaking It All

It looks like a nervous start to the week, with stock futures falling and stocks falling in China and Hong Kong amid a technology crackdown. Bitcoin is heading the other way, thanks in part to a help-wanted ad from Amazon.com.

Speaking of technology, we’ve got all the big hitters rolling out the results this week: Apple AAPL,
+0.71%,
Microsoft MSFT,
-0.58%,
Google parent alphabet GOOGL,
+0.10%,
Facebook FB,
+0.87%,
Amazon AMZN,
+0.87%
and Tesla TSLA,
+0.90%,
with the results of the electric car manufacturer after the closing of the markets on Monday.

US call of the day comes from Cathie Wood, founder of ARK Invest, whose flagship ARK Innovation exchange-traded fund ARKK,
-0.21%
experienced a bumpy July due to market volatility. But Wood, who has not been without her critics, has doubled the strength of her fund: disruptive technologies and innovative business models and their importance in a portfolio.

In the first of a series of interviews published Monday on Real Vision, Wood addressed Wall Street’s shortcomings, which she says needs more detailed technology analysis. She highlighted her approach to Tesla as an example.

Wood’s base case calls for shares of the EV giant to hit $3,000, which is considered “crazy” given that shares are closer to $700, she noted.

“We believe that the reason there is such great inefficiency in Tesla’s valuation is the short-term horizon of analysts and the wrong analysts following it,” said Wood, explaining that Tesla is a multi-faceted technology company backed by Wall Street. car analysts.

“Tesla is a technology company, but it’s not just one technology company,” she said, pointing to energy storage, robotics, artificial intelligence and software-as-a-service. “So we have three analysts building the Tesla model,” she said.

How big is her overall disruptive and innovative vision in general? She said the market cap in public equity markets focused on transformative innovation was about $7 trillion in 2019, then doubled to $14 trillion in 2020.

“And we believe that number will grow to $75 trillion plus in the next five to 10 years and will probably lead to more than all equity market valuation because… the other side of disruptive innovation is creative destruction, so the traditional benchmarks today are increasingly populated by cheap traps because they will be disrupted or destroyed,” Wood said.

It will be “critical to get innovation right and I don’t believe traditional research departments are set up to do that now,” the money manager said. You can watch part one of her interview here.

Major technical problems in China and Bitcoin breaks out

China 000300,
-3.22%
and Hong Kong HSI,
-4.13%
shares have been hammered, led by tech names, after Beijing announced an overhaul of the technical education sector. Shares of US-listed New Oriental Education & Technology Group EDU,
-19.53%.
Regulators are up a bit in the pre-market after a 54% slump on Friday. China also ordered technology conglomerate Tencent 700,
-7.72%
to terminate exclusive contracts with music copyright holders — US-listed shares of Tencent Music TME,
-4.41%
are sinking.

China also blames the US for a stalemate in relations between the two at the start of high-level bilateral talks.

Bitcoin BTCUSD,
+11.09%
surged over the weekend, approaching $39,000. Some point to an Amazon job listing for a digital currency and blockchain product leader, leading some to speculate that the e-commerce giant could accept cryptocurrencies. Bitcoin has recently been boosted by positive comments from Tesla CEO Elon Musk, Twitter TWTR,
-3.08%
ARK CEO Jack Dorsey and Cathie Wood.

Share of defense group Lockheed Martin LMT,
-3.28%
decline after disappointing earnings, while shares of toymaker Hasbro HAS,
+8.97%
rises after a big profit. Tesla comes after the bell.

In deal news, PerkinElmer PKI diagnostic group,
+1.81%
buys BioLegend, which creates research solutions for immunologists, in a $5.25 billion cash and stock deal.

Shares of Lucid Motors will start trading on the Nasdaq Monday after the electric car group’s merger with a blank check company was approved Friday.

the markets

Dow Futures YM00,
-0.18%
are down nearly 100 points, with other stock futures ES00,
-0.03%

NQ00,
-0.09%
slip. Oil CL.1,

is slightly lower, while the yield on the 10-year bond fell by 3 basis points to 1.25%.

The graph

On the COVID-19 front, a decline in UK delta-driven cases raises some hope that an end is in sight for climbing infections elsewhere.

“The UK saw a relentless parabolic rise in cases. This took 45 days. And even without any mitigation measures, UK cases have fallen over the past week,” Thomas Lee, founder of Fundstrat Global Advisors, told clients in a note. “If the US follows the lead of the UK, daily cases in the US could peak in the next 12 days.”

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