Here’s the Engaging and SEO-Friendly Rewrite: “ARK CEO Cathie Wood Reveals the Reason Behind Avoiding the Arm IPO Frenzy”

ARK Invest CEO Cathie Wood stated that she did not participate in Arm’s IPO last week due to its overvaluation compared to its competitors. Wood believes Arm, a British chip designer controlled by SoftBank, received too much emphasis on artificial intelligence (AI) and not enough focus on its competitive dynamics.

Arm, which listed on Nasdaq last Thursday at an IPO price of $51 per share, experienced an initial surge with its stock price rising nearly 25% on the first day of trading. However, the stock has since declined daily, closing at $55.17 on Tuesday.

During an interview on CNBC’s “Squawk Box Europe,” Wood emphasized the importance of innovation and AI-exposed companies in the market, saying that innovation is undervalued given the significant opportunities ahead. However, she believes Arm’s valuation was too high and prefers lower-priced stocks with greater exposure to AI in her portfolios.

Wood explained, “We did not participate in that IPO because we believe Arm’s valuation was on the high side, and we see other stocks in our portfolios that provide more AI exposure at lower prices.” Arm declined to comment on Wood’s statement.

Wood’s flagship ARK Innovation ETF holds top holdings such as Tesla, Shopify, UiPath, Unity, Zoom, Twilio, Coinbase, Roku, Block, and DraftKings. The ARK ETF has experienced a resurgence this year after facing losses during the recent cycle of interest rate hikes. Wood believes the anticipation of interest rates peaking will continue to drive investors towards innovative stocks with AI exposure.

With inflation decreasing and central banks expected to unwind their aggressive monetary policies over the next year, Wood believes it will be a favorable environment for innovation and global megatrend strategies. Recently, ARK Invest acquired Rize ETF, marking the company’s entry into the European passive investment market.

Wood expressed excitement about expanding into Europe, as there has been demand for ARK’s research in the region despite the lack of investment opportunities. She believes that advancements in technology, particularly in AI, have reduced costs and made it easier to build and scale tech companies worldwide. Wood said, “We are very open-minded about technologies flourishing throughout the world, including Europe.”