Scientifically Dismantling Cathie Wood

Cathie Wood's ARKK innovation ETF has not been having a great 2022 with the fund having lost 68% of its value. One of the biggest criticisms levied against Wood is her tendency to buy shares of money-losing companies. To rebuff these claims she has created her own measure of profitability which she calls adjusted EBITDA. Under this metric most of her portfolio companies are profitable. But what is adjusted EBITDA and is it an accurate reflection of true financial performance?

0:00 - 1:44 ARK 2022 performance
1:45 - 6:35 Adjusted EBITDA
6:36 - 8:45 Roblox
8:46 - 12:36 Divorced from reality
12:37 - 14:49 Cash burn
14:50 Cathie Wood's incompetence



#Wallstreetmillennial

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[benhaley]

Cathie Wood is the icon of the modern retail investor. She picks a good stock once, then chases that high for the rest of her life while losing money! This is relatable investing.

[RAS_Squints]

'She said old school investor are too obsessed with accounting metric and cash flows' To be fair, when the money printer goes her strategy works. When we are going into a recession, people focus one actual proven accounting metrics and cash flows

[accrualworld]

I’m an accountant and you should never trust a firms adjusted EBITDA figures alone. They can report them however they like. Start with the cash flow statement. Cash never lies.

[FKS]

She's a YOLO investor who got lucky during the COVID run-up with free money and low interest rates.

[diegovalles]

As an accountant, casually recognizing deferred revenue is laughable 😂

[WillieFungo]

The strangest thing about her is that she continues to double-down on her horrible ideas.

[nas]

It's not just her. It seems like all venture capital firms and Silicon Valley have collectively decided that profitability is for losers.

[bikinggreg]

Never mistake 'luck' for 'skill.'

[GoBayside]

Everyone is an investing genius in a record bull market.

[bullettime]

I don't know Kathy Woods was a chef because this cookbook is amazing

[DoctorBiobrain]

My accounting method is to take the average quarterly gross revenue of Apple combined with the average daily expenses of a florist and apply that to all companies equally. Then I use a chicken to pick my stocks by pooping on a Twister mat. It works pretty well.

[bntleg]

Something I have never gotten my head around is her obsession with first mover advantage. Amazon was not the first e-commerce store, Yahoo existed before Google, the pebble watch existed before the Apple watch, etc...

[samsonsoturian]

It sounds like Cathy's team cooked the books for these companies in order to delude themselves it was a good idea.

[AlanSmith]

Cathy gets her 0.75% either way.

She winning. lol

[tomw]

ARKK total returns over the last 5 years is -8.8%. S&P 500 total returns over the last 5 years is 53.9%.

[vinniechan]

There are good reasons why you don't recognise money received as revenue until you have earned it
Cathie is basically saying she knows better than accountants with decades of industrial experience and reinvent the wheel

[Andre_Beth]

You are the voice of reason. I have been dumbfounded as to how she manages to keep her business afloat. I have never come across such a delusional fund manager before.

[Derekzparty]

You know your company is screwed when Cathy can't even fudge your numbers to profitability.

[terryleong]

This is why one can make money on SARK which is a short of Catie Woods portfolio

[samsonsoturian]

Most of Cathy's team is very young. As in, she recruited them while they were in college kind of young. Of course they don't seem to understand business math.