nextbigtrade
Stage Analysis Trader, Creator of Next Big Trade Premium Newsletter
Biotech's usual Q4 strength ahead of JPM season makes aggressive rallies in smaller names highly likely. ARKG is starting to break out, and PDS Biotechnology is showing multiple buy signals. If ARKG keeps running as expected, Nautilus Biotechnology, PDS Biotechnology and Quantum-Si could reasonably rally toward about $10 soon; broken chart structures would invalidate that view. x.com x.comÂ
Genomics stocks appear to be benefiting from AI, with the ARK Genomic Revolution ETF clearly outpacing broader biotech. x.comÂ
Genomics and innovation biotech stocks are an unusually asymmetric short: the companies are 50-100% overvalued even on an aggressive DCF and burn cash while rates break out. They are benefiting from quarter-end markups that end tomorrow, the chart is overbought, and they broke out on Moderna news that has nothing to do with them. Some will benefit from AI, but that is largely narrative. x.comÂ
ARKG's genomics thesis faces a timing problem, as much of the index consists of companies with no important clinical data readouts until 2028 or later. Clinical trials remain painstakingly long, and AI is moving faster than trial progress can keep up with, raising the question of when the broader biotech theme becomes overextended. x.comÂ
ARK Innovation ETF is unlikely to ever regain its Covid highs relative to the Nasdaq 100. It just hit a fresh 52-week low against the Nasdaq 100 and is nearing an all-time relative low, while carrying one of the highest ETF expense ratios. Cathie Wood day-trades names in the fund and has badly underperformed the index for years while collecting hundreds of millions in fees. x.comÂ
ARK Innovation is a poor bet because Cathie Wood's track record is horrible and she did not see AI coming, so there is little reason to believe she can see around the next corner. Investors still put a net $2.5B into the fund in a week. x.comÂ
Biotech is the next AI trade after compute and memory as the market shifts to the application layer, and the ARK Genomic Revolution ETF could top $100. Biotech runs on data, pattern recognition, R&D and precise manufacturing, all things AI excels at, helping firms like Twist, Tempus and CRISPR make drugs faster and reach profit sooner. The Trump administration is also opening the door to innovation and M&A. Winners are hard to pick, so a basket is easiest; expect volatility. x.com x.com x.com … Show more
ARK Genomic Revolution ETF has incredibly high short interest, setting up a possible squeeze. If days to cover rises above 8, the move could get wild. x.comÂ
ARK Innovation ETF has investors paying to lose money: as @jbulltard1 notes, it lost ground even while innovative growth stocks rallied nonstop. A team of roughly 50 people still underperforms the S&P 500, and a random person on the street is probably a better stock picker than analysts relying on Monte Carlo simulations. @jbulltard1 also points out that its chief futurist, Brett Winton, sold Nvidia at around $18 and remains in the role. x.com x.com x.comÂ
The biotech and genomics boom is best owned broadly, because single biotech stocks are binary bets on trial results no analyst can handicap. One failed readout can halve a stock, as Novo Nordisk's lost market value on disappointing data showed. Owning blue-chip biotech and high-beta genomics as diversified baskets captures the funding rebound, the AI drug-discovery tailwind and the re-rating after years of deep bear market and a decisive breakout, without the single-molecule lottery. x.com x.com … Show more