The autonomous/self-driving vehicle investment thesis is a mix of frustration and allure, but the latter trait could be highlighted in 2022 as more technological advancements come to pass.
Should that happen, the ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ) could well be one of the exchange traded funds that stands out. Quietly, ARKQ notched a modestly positive performance in 2021 — not all disruptive growth strategies can say that.
With 2022 here, it’s possible that autonomous transportation takes off in earnest, and that’s relevant to ARKQ investors because the $2.46 billion ETF is one of a few that make autonomous transportation a point of emphasis while marrying that exposure with other related, disruptive technologies, such as artificial intelligence and robotics. There are reasons to be optimistic regarding autonomous transportation advances in 2022.
“Tesla’s latest Full Self-Driving (FSD) Beta software version 10.8 rolled out to widespread acclaim. Drivers report substantial improvements in smoothness, with fewer disengagements and interventions,” says Matthew Tower, theme developer at ARK Investment Management. “If FSD is analogized to a teenage driver with a learner’s permit, the advancement from 10.5 to 10.8 could be thought of as a 16-year-old improving to age 17, a year’s worth of competency accrued in just one month.”
It’s not surprising that Elon Musk’s Tesla (NASDAQ:TSLA) is a self-driving leader. The electric vehicle giant has been trying to refine the technology for years. For ARKQ investors, that’s important because Tesla is the fund’s largest component at a weight of nearly 10.6%, or more than 300 basis points ahead of the ETF’s second-largest holding.
It’s possible that Tesla could make significant FSD progress this year, potentially fanning the flames of an already-hot rally in that stock while lifting ARKQ along the way.
“We believe, FSD could roll out to the entire fleet in 2022, unlocking billions in recurring revenue, as most drivers will find the $199/month subscription a must. FSD could reach age 25 competency by late 2022 or early 2023, facilitating the initial deployment of RoboTaxis, which at scale could be ‘the most meaningful economic productivity delivering innovation of all time,’” adds Tower.
In summary, 2022 could be a big year on the self-driving technological advancement front, and ARKQ is one of the ETFs best-positioned to benefit from that trend, assuming it emerges.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.