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Yahoo Finance's Brian Sozzi breaks down his recent interview with Ark Invest Founder & CEO Cathie Wood and her comments on investing in Robinhood following the company's volatile IPO, and payment for order flow.
JARED BLIKRE: Brian, you sat down on Friday with Cathie Wood AND you talked to her about a number of things. And I know he's got some more clips locked and loaded for us. So what's your take on her?
BRIAN SOZZI: Yeah. You spend almost 25 minutes with her, you're going to have a couple of clips to share on the following day and, I don't know, a couple of months down the line. But Jared, I really asked her at length about Robinhood. Cathie Wood purchased shares of Robinhood in early August, sent the stock to $85 at point in early August as it just got an envelope into that meme stock trading.
The stock is back down to about $43 or so. So I asked Wood what her current thinking on Robinhood is. And then also her thoughts on payment for order flow. Are you buying any more and what is your thesis right now on Robinhood?
CATHIE WOOD: Well, as you know, Brian, we report our trades for the ETFs at the end of every day. And so, we picked our spots when Robinhood came public. It fell to Earth. And we picked our spots at that time. It's roughly a 1% position. And we're watching it.
We're looking at the payment for order flow controversy. We know that Chairman Gensler at the SEC is looking at that. That's a large percentage of Robinhood's revenues. But we actually think that not much is going to change there because the system has been so good from an execution point of view for the end investor. So we'd be surprised to see a lot change on that front. But, again, we're in a situation where we have to listen to what the SEC is saying.
BRIAN SOZZI: And Jared, I think we can agree. If payment for order flow is in fact banned, Robinhood's business model essentially goes up in smoke. Do you think they could be-- do you think they can make that successful pivot?
JARED BLIKRE: Well, you got to think what are they going to do. They still have all their client base and it's not like they can't pivot in some other direction. It just makes it difficult for them to remain as a commission-free brokerage house without this particular structure. But I'm sure they're working behind the scenes, as well as other industry participants to figure out what the alternative would look like.
Also important to realize, this is going to take years, if it happens at all. The SEC moves at a glacial pace, and they're just rolling out with some initiatives right now. Gensler is just getting warmed up here. And it takes years to implement any kind of new rulemaking at the SEC.
And then even when that happens, you have lobbyists from the industry come in. And we saw this with Dodd-Frank that kind of water things down. It's an incredibly complicated and lengthy process. And nothing is going to change overnight. So I don't even see how this really affects, at least, the share price of Robinhood this year, probably even the next.
BRIAN SOZZI: And the side story here, Jared, I think with Cathie Wood. She still remains a strong supporter of Bitcoin. So she owns Coinbase, she owns Square, I would even argue that Tesla is an indirect play on crypto, just given how Elon Musk, how he has come out very forcefully on various cryptos. Of course, holding Bitcoin on its balance sheet. And, of course, Robinhood a bulk of their business is in fact cryptos. So she remains pretty aggressive on the Bitcoin front.
JARED BLIKRE: Yeah. And as we were talking about before, she's been remarkably consistent on her positions, and on her thesis, on her base cases over the years. And even on-- I don't know if we're going to get that Tesla clip later on, but she's been consistent with her price targets on Tesla too over the last year. So, anyway, great to hear Cathie Wood.