![](https://crypto4nerd.com/wp-content/uploads/2024/01/19haIGYVaJS0qM20cvCbnXA.png)
In 2020, I rode the Cathie Wood Hype Train, alongside all of Reddit’s r/wallstreetbets! For those of you who don’t know, Cathie Wood is the famous (or infamous) CEO and Chief Investment Officer of Ark Invest. Her investing philosophy is a lot different than traditional investing firms, as she focuses on innovative technologies such as artificial intelligence, genomics, and blockchain. Her name started flooding the media in 2020, when her Ark ETFs dramatically outpaced the market due to her strong conviction in companies like Tesla.
About 3 years later and her Ark ETFs aren’t doing as well as they once were. Her most famous ETF, ARKK, is up 19.2% for the past year and 10.0% for the past 5 years. This is in contrast to the S&P 500 (SPY), which is up 20.4% for the past year and 84.8% for the past 5 years!
Believe it or not, I am still a huge fan of Cathie’s Investment philosophy. Like her, I’m a true believer in next-generation innovative technologies. However, I also believe that a company’s financial health plays a huge role in its future success. So, I’m going to use AI to analyze some of the top holdings that are currently in Cathie Wood’s ARKK ETF.
I’m going to be as objective as possible with my analysis. One important disclaimer is that this article is not intended to be used as financial advice. The purpose of this article is to showcase how AI can be used to automate aspects of the investing research process. Always do your own research when making investing decisions.
To perform this analysis, I’m going to be using the NexusTrade platform. NexusTrade is an AI-Powered investing research platform. It gives non-technical users the ability to automate the tedious parts of the investment decision-making process. For example, users can use it to create automated trading strategies and deploy those strategies to the market. However, we’re not going to be using those features today; we’ll be utilizing Aurora, NexusTrade’s AI Chat Assistant, to perform detailed financial analysis.
To perform the analysis, I’m going to analyze the top 8 holding of ARKK as of Jan 25th, 2024. Ark Invest is a unique firm that publishes their holdings every single day. Thus, by checking the website, we can see exactly what stocks they are holding.
From my calculations, ARKK’s top 8 holdings represents around 53% of the holdings in the ETF. I could opt to do a full analysis, but to make this article concise, I will only analyze the top 8 stocks.
Specifically, the companies I will be analyzing are Coinbase, Tesla, Roku, Zoom, UIPATH, Block, CRISPR and Roblox.
It’s extremely simple to follow along or perform your own analysis with different stocks, just do the following steps
- Create a free NexusTrade account
- Navigate to the AI Chat
- Copy/Paste The Example Prompt. For example:
Analyze Tesla’s 2022 full year financials
You can change the company name, the period, and the year for the analysis. Note that even though it’s 2024, not all companies have reported their financials for the full fiscal year of 2023. Thus, if you try to analyze it, the chat will give you an error. That is to be expected.
With Cryptocurrency being all of the rage, it’s not surprising that Coinbase is now ARKK’s number on holding. I remember when Coinbase had its IPO; Cathy didn’t hesitate to buy millions of dollars at the stock’s all time high. Here’s what AI has to say when I ask it to analyze Coinbase.
COIN (COINBASE) Summary (From Aurora):
Pros:
- Strong Revenue: The company has a solid revenue of $674,148,000, indicating a healthy business operation.
- Positive Free Cash Flow: The free cash flow of $188,629,000 suggests that the company has excess cash after covering its operating expenses and capital expenditures.
- Low Price-to-Sales Ratio: With a PS ratio of 7.10291, the company’s stock price is relatively low compared to its revenue, which may indicate an undervalued stock.
Cons:
- Negative Net Income: The net income is -$2,265,000, indicating that the company’s expenses exceed its revenue, resulting in a loss.
- High Total Debt: The total debt of $3,076,599,000 raises concerns about the company’s financial leverage and ability to meet its debt obligations.
- Negative Earnings Per Share: The negative EPS of -$0.01 reflects a loss per share, which may deter potential investors.
Summary:
Coinbase Global Inc has shown strong revenue and positive free cash flow, indicating a healthy business operation. However, the company has incurred a net loss, high total debt, and negative earnings per share, which are areas of concern. Investors should carefully evaluate the company’s financial position and market conditions before making investment decisions.
Rating: 3/5 (This is not financial advice. Please conduct thorough research before making any investment decisions.)
For more detailed information, you can refer to the source provided:
Sure, we could analyze each and every one of the stocks individually. But that would take far too much time. Instead, we can streamline this process by asking Aurora to analyze all of the stocks simultaneously! To improve the analysis, we can also opt to use GPT-4 instead of GPT-3.5.
For example, to analyze all of the companies I mentioned, I can say:
Analyze 2023 Q3 earnings for all of the following stocks COIN, TSLA, ROKU, ZM, PATH, SQ, CRSP, and RBLX. Afterwards, give an average rating for this entire portfolio based on your analysis
The entire output is far too long to copy/paste. So instead, I’ll just paste the summary. To read the full analysis, create a free NexusTrade account.
Summary: Based on the analysis of the financial statements for Coinbase, Tesla, Roku Inc, Zoom, UiPath, Block, CRISPR, and Roblox, it is evident that Tesla has the highest revenue and market cap among the listed companies. However, it also has the highest total debt, which may pose a risk. Zoom has the highest net income and a strong position in the market. UiPath and CRISPR have lower total debt, indicating lower financial risk. Roblox has a strong position in the market with a higher revenue, but it also has a higher total debt and lower profitability. Coinbase and Roku Inc have lower profitability and face financial challenges. Block has a strong position in the market with higher revenue and positive free cash flow. It is important to note that these are just initial observations and further research is recommended before making any investment decisions.
Average Rating for the Portfolio: 3.5
For more detailed information, you can refer to the sources provided:
— Coinbase Financial Statement, Tesla Financial Statement , Roku Inc Financial Statement , Zoom Financial Statement, UiPath Financial Statement, Block Financial Statement, CRISPR Financial Statement, Roblox Financial Statement
First, I would like to point out how fast this analysis was. Before AI and Large Language Models, a user would have to search for all of the companies individually, look up the financial statements, and parse through difficult-to-read PDFs.
Now, we can get a summary of an entire portfolio within minutes with one simple command. Thanks to NexusTrade, we’ve streamlined the process. By typing in a single command, we were able to analyze 8 companies in 2 minutes. We got detailed financials for each, pros and cons, and a quick, easy-to-digest summary.
This is extremely useful. You can’t do this on any traditional brokerage app. NexusTrade is a game-changer for the financial industry. The ability to analyze multiple stocks simultaneously allows you to make your decisions in minutes, and use the rest of the time doing what you love. Just sit down and try it for yourself; you’ll be amazed at the value the AI brings.
It’s important to note that while this is convenient, an AI is no substitute for doing your own research. For example, the analysis doesn’t include any recent news data as input. If the analysis was done on a company like Boeing, who is in the press constantly due to their plane malfunctions, then it would miss that important context that’s very relevant for the company’s evaluation. Nevertheless, it offers a great stepping stone for new users looking to improve their investing decisions.
It’s not just Boeing’s news data that’s missing. Any real-time sentiment data about a company is absent from the model unless it’s explicitly loaded as input. A company could’ve revised their guidance, or launched an expensive product that flopped heavily. These factors aren’t just after-thoughts; they are critical when thinking about whether or not to invest in a certain company.
Lastly, doing what everyone else is doing is not an effective way to have an edge over the market. If everybody is buying the exact same stocks, then how are you going to make money than the average person? AI is extremely useful for as a tool to streamline decisions, but it should be augmented with your first-hand investment knowledge. Nevertheless, this offers a great tool for beginners to start doing real analysis and experts to expedite the analysis that they were already doing. The value this tool ads is undeniable.
The NexusTrade AI-powered financial analysis tool offers a revolutionary approach to evaluating investment portfolios, exemplified by its analysis of Cathie Wood’s ARKK ETF.
In the final analysis, Cathie Wood’s ARK Invest, as assessed by the NexusTrade AI-powered financial tool, presents a compelling yet cautious narrative. With an average portfolio rating of 3.5, it suggests that while Wood’s investment strategies in cutting-edge technologies like AI, genomics, and blockchain hold significant potential, they also carry inherent risks. This rating reflects the dual nature of ARK Invest’s approach: forward-thinking and aggressive in capitalizing on next-generation technologies, yet also subject to the volatility and unpredictability of these emerging sectors.
As I mentioned, I am a fan of Cathie Wood’s investment philosophy. With my non-expert opinion, a portfolio of 3.5 should at least match the S&P 500 for this year. Further analysis would need to be done to get a more accurate estimate. For example, we can create experiments based on these type of metrics, and try to generate portfolios based on metrics like profitability, income growth, and sentiment. This is something that the NexusTrade will be able to do very soon.
We’ll see if Cathie’s favorite stocks have a year as bullish as it was in 2020. Thank you for reading.
🤝 Connect with me on LinkedIn
👨💻 Explore my projects on GitHub
📸 Catch me on Instagram
🎵 Dive into my TikTok