ARK Investment Management LLC

February 06, 2020 | For Informational Purposes Only

This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.
There is no assurance that the Adviser will make any investments with the same or similar characteristics as any investment presented. The reader should not assume that an
investment identified was or will be profitable. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE, FUTURE RETURNS ARE NOT GUARANTEED.

www.ark-invest.com

BIG IDEAS 2020

Introduction to ARK’s Big Ideas
ARK Invest aims to identify large-scale investment opportunities by focusing on publiccompanies that are the leaders, enablers, and beneficiaries of disruptive innovation.
While we believe innovation is the key to growth, the opportunities it creates often are
missed or misunderstood by traditional investment managers who are more focused on
sectors, indexes, short-term earnings, or price movements.
ARK seeks to gain a deeper understanding of the convergence, market potential, andlong-term impact of disruptive innovation by researching a global universe that spans
sectors, industries, and markets. Today, we seem to be witnessing an acceleration in newtechnological breakthroughs.
To enlighten investors on the impact of these breakthroughs and the opportunities
they will create, we began publishing Big Ideas in 2017. This annual research reporthighlights the latest developments in innovation and offers some of our mostprovocative research conclusions for the coming year.
We hope you enjoy our “Big Ideas” for 2020.

2

BIG IDEAS 2020

ARK’s Big Ideas 2020
1. Deep Learning — From Vision to Language
2. Streaming Media — The Primary Technology Behind Content Distribution
3. Electric Vehicles — Faster Adoption Than Most Think
4. Automation — Increased Productivity and More Jobs
5. 3D Printing — An Underestimated Technology
6. Autonomous Ridehailing — The Future of Transportation
7. Aerial Drones — A Cost Saver and Potential Life Saver
8. Next Generation DNA Sequencing — The Transformation of Oncology
9. Biotech R&D Efficiency — The Convergence of Technologies in Healthcare
10. Digital Wallets — The Transformation of Banking
11. Bitcoin — An Evolution of Monetary Systems

3

Disclosure

BIG IDEAS 2020

Risks of Investing in Innovation
Please note, companies that ARK believes are capitalizing on disruptive innovation and developing technologies to displaceolder technologies or create new markets may not in fact do so. ARK aims to educate investors and seeks to size the potential
investment opportunity, noting that risks and uncertainties may impact our projections and research models. Investors should
use the content presented for informational purposes only, and be aware of market risk, disruptive innovation risk, regulatory
risk, and risks related to certain innovation areas. Please read risk disclosure carefully.
RISK FACTORS OF INVESTING IN INNOVATION
Rapid Pace of Change

Exposure Across Sectors and Market Cap

Uncertainty and Unknowns

à Aim for a cross-sector understanding of technology
and combine top down and bottom up research.
Source: ARK Investment Management LLC, 20194

Regulatory Hurdles

Disruptive
Innovation

Political or Legal Pressure

Competitive Landscapeà Aim to understand the regulatory, market, sector,
and company risks. (See Risk and Disclosure at the end)

BIG IDEAS 2020

Deep Learning

Deep learning is powering the next generation ofcomputing platforms. Thanks to deep learning,
artificial intelligence (AI) systems can see, hear,and understand natural language at near humanlevel accuracy.
ARK believes that deep learning will be more impactfulthan the Internet. The Internet created roughly$10 trillion in global equity market capitalizationin 20 years. We believe that deep learning will have
3x that impact, adding $30 trillion to global equity
markets over the next two decades.

Author: James Wang, ARK Analyst
5BIG IDEAS 2020

Deep Learning Software Teaches Itself
Traditional Software

Deep Learning Software

Learning Program

Traditional software is coded by an army of human programmers.
It’s expensive, fragile, and difficult to maintain. Traditional software
cannot perform cognitive tasks such as image and speech
recognition.

Source: ARK Investment Management LLC, 20196

Deep learning is software that is not ‘written’ but is ‘trained’. Humans
create AI models and gather labeled data. The software then learns
the right behaviors, improves with more data, and often exceeds
human performance.

BIG IDEAS 20207

Deep Learning Is Powering the Next Generationof Computing Platforms
Conversational
Computers

Self-Driving Cars

Consumer Apps

In 2019, smart speakers responded to 100
billion commands and questions, a numberthat increased 50% in just one year.1

Waymo vehicles have traveled
more than 20 million fullyautonomous miles.2

TikTok uses deep learning for video
recommendations and is growing its
user base 10x faster than is Snapchat.1[1] Source: ARK Investment Management LLC, 2019; Based on company derived statistics.
[2] Kyle Wiggers, “Waymo’s autonomous cars have driven 20 million miles on public roads”, VentureBeat https://arkinv.st/2N5fC4D.
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

AI Software Should Create an $18 Billion Market
for AI Hardware
The slowdown in Moore’s Law1 means no more ‘free’ performance upgrades every two years. As a result, the server
industry will have to invest in more computing hardware. AI accelerator chips, which optimize deep learning
workloads, generated $4 billion in revenue last year and should grow 36% at a compound annual growth rate (CAGR)
to $18 billion in 2024.
Global Server Revenue by Component
CPU

MemoryStorageOther

AI Accelerator$10 0

36% CAGR
Billions (USD)

$80
$60
$40
$20
$0

2019
8

2024

[1] Moore’s Law: Gordon Moore’s prediction that the number of transistors on a chip would double every two years.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; “Worldwide Server Market Revenue Declined 6.7% Year Over Year in the Third Quarter of 2019,
According to IDC.” IDC, 5 Dec. 2019, https://arkinv.st/2ZSWcFh. Assumes 15% OEM margin.

BIG IDEAS 2020

Deep Learning Workloads Are Growing at 5x
the Rate of Moore’s Law
Hardware and software improvements reduced the cost to train neural networks by 100x in roughly two years.
As a result, AI capabilities are multiplying as models are trained with 10x more computing power each year.
Cost to Train a Neural Network For Image Recognition

Two Eras of Compute Usage in Training AI Systems(Using ResNet-50 Database)
Legacy GPUs

Nvidia Volta GPUs

2x every two years
Google TPUs

$1,000

$10 0

$10

$1
Mar 179

Apr 18

Oct 18May 19Dec 19Neural MachineTranslation

1.00E+01

Tesla
Autopilot

BERT
1.00E-01

VGG

ResNets

AlexNet1.00E-03
Deep Belief Nets andlayer-wise pretraining

1.00E-05
1.00E-07
1.00E-09

Sep 17

AlphaGoZero

1.00E+03
Training Compute Time (Petaflop-Days*)

Cost to Train Neural Network (USD)$10 ,00 0

10x per year

1980

TD-Gammon v2.1

DQN

BiLSTM for Speech
LeNet-5
RNN for Speech

NETtalk

1990

2000

2010

2020

GPU: Graphics Processing Unit; TPU: Tensor Processing Unit | *A “Petaflop-Day” refers to performing a quadrillion operations per second for a day.
Source: ARK Investment Management LLC, 2019; Amodei, Dario. “AI and Compute.” OpenAI, OpenAI, 12 Dec. 2019, https://arkinv.st/2ZOH2Rr; “DAWNBench.” Stanford DAWN Deep Learning Benchmark (DAWNBench),https://arkinv.st/2MUITyO. | This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

AI Is Expanding From Vision to Language
ARK believes that 2019 was the year of conversational AI. For the first time, AI systems could understand andgenerate language with human-like accuracy. Conversational AI requires 10x the computing resources ofcomputer vision and should spur large investments in the coming years.

Compute Time (Petaflop-Days*)

Training Time For Different AI Systems
1,0 00.0
~10x

100.0
~10x

10.0
1.0
0.1

Pre-AI
Deployment Year:
Industry Penetration:

10

Most global 2000
companies today

Computer Vision

Language Understanding

Reinforce ment Learning

2015

2018 - 2020

2020 +

Tech giants:
Google, Facebook,
Baidu, Amazon etc.

Elite researchorganizations:
DeepMind, OpenAI

Select tech companies
and startups*A “Petaflop-Day” is performing a quadrillion operations per second for a day.
2012
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

Sizing the Opportunity
Deep learning could create more economic value than the Internet. Within two decades the Internet added roughly$10 trillion to the global equity market cap. Since 2012, deep learning has created $1 trillion in market capitalization.

ARK believes it will add $30 trillion by 2037.
Market Cap Creation Internet vs. Deep Learning

Share of Global Market Cap

30.0%

Information Technology

22.5%Internet

Deep Learning$1 T

21% CAGR$30 T

15.0 %$10 T
3% CAGR

7.5%

$20 T
0.0%
1997

11

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019

2019

2037

BIG IDEAS 2020

Streaming MediaStreaming technology is delivering more and more
content over the Internet. Now consumers have instantaccess to massive video, audio and game libraries. ARK
believes streaming could become the primary
technology behind content distribution, reshaping
viewing habits.
According to our research, streaming revenue should
more than quadruple during the next five years, from$86 billion today to $390 billion in 2024.

Author: Nick Grous, ARK Analyst
12BIG IDEAS 2020

Historically Companies Sold Either Content or Distribution— Now They Are Vertically Integrating Through Both
1980–2010

2010+

Content

Content & Distribution

Distribution

13

Source: ARK Investment Management LLC, 2019
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

Subscription Video On Demand (SVOD)
Is Taking Over Linear TV
SVOD is a relatively inexpensive source of premium content. Per hour watched, Netflix costs consumers nearly
75% less than cable. Thanks to compelling costs, Americans watch 3.4 streaming services on average.
Linear TV vs. SVOD:

Cable TV vs. Netflix Subscription:

US Market ShareUS Cost Per Hour Viewed

Linear TV Estimated Revenue

SVOD Esti mated Revenue

Cable TV Cost (Minus Ads*)
$1.20

$120
$100
$80
$60
$40
$20
$-

$0.81
$0.80
$0.60

$0.57
$0.34

$0.40
$0.20

$0.17

$0.22

$2014

14

$1.08

$1.00
Cost Per Hour Viewd

Revenue (Billions USD)

$140

Netflix Cost

2015

2016

2017

2018

2019 2020

2021

2022

2023 2024

2014

2019

2024

*Minus Ads: In our cost per hour estimate for cable we excluded the amount of time spent watching advertisements.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; Fitzgerald, Toni. “How Many Streaming Video Services Does The Average Person Subscribe To?” Forbes,
Forbes Magazine, 29 Mar. 2019, https://arkinv.st/2ZMohxS; “The Cross Platform Report.” Nielsen, Oct. 2011, https://arkinv.st/39sMoGB; “Cable Operators' Shift to Profit Mode Accelerates Cord-Cutting.” EMarketer,https://arkinv.st/35lJbFo; Sutton, Kelsey. “Nearly 25% of U.S. Households Will Be Cord-Cutters by 2022, According to EMarketer.” Adweek, Adweek, 6 Aug. 2019, https://arkinv.st/2ZM6hnw.

BIG IDEAS 2020

Linear TV Advertising Is Approaching a Cliff
Ad-supported over-the-top (OTT) streaming channels should gain significant market share during the next few
years. According to ARK’s research, OTT ad revenues could increase more than 7x during the next five years, fromnearly $6 billion in 2019 to roughly $44 billion in 2024.
Global TV Advertising Market ShareOTT Services

Television Advertising$250

Global Revenues (Billions USD)

51% CAGR
$200

28%
$150

$10 0

72%
$50

$0
2000

15

2002

2004

2006

2008

2010

2012

2014

2016

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; “Booming Internet Ads Power Faster Global Adspend Growth.” Zenith, 21 Mar. 2019, https://arkinv.st/36juELP.

2018

2020

2022

2024

BIG IDEAS 2020

Music Streaming Services Are Reviving the Industry,and Reshaping It
Thanks to streaming, the music industry is recovering from more than a decade of declining revenues.
According to ARK’s research, music streaming revenue in the US could grow at an average annual rate of 18%,
from $8 billion in 2019 to $18 billion in 2024.

Revenue Adj. for Inflation (Billions USD)

US Music Industry Revenue Forecast During the Next Five Years
Physi cal

$25

Streaming

18% CAGR

$20
$15
$10
Physical(8-Track, Vinyl, Cassette, CD)$5

Streaming(OTT and Paid)
Digital(Downloads)

$1978

16

Digital

1980

1982

1984

1986

1988

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; “2018 RIAA Music Industry Revenue Statistics: RIAA.” RIAA, https://arkinv.st/39BdB9S.

BIG IDEAS 2020

Cloud Gaming Is Poised For Explosive Growth
Cloud gaming1 is likely to take share from console- and PC-gaming, growing from nearly $263 million in 2019 to$13.5 billion, or from 0.2% to 6.3% share during the next five years. Among the reasons for this share shift are
instant access to games, dynamic back end support, and compatibility with any device.

2019 Estimated Global Game Market Share
MobilePC

Console2024 Forecast of Global Game Market Share

Cloud

Mobile0.2%

Console

6.3%

30.4%

Cloud

120% CAGR

23.4%

2019

45.8%

2024

Total $149 B

23.7%

17

PC

[1] We consider cloud gaming to be subscription-based services that offer instant access to gaming content libraries.
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; “Newzoo's Global Games Market Report.” Newzoo, https://arkinv.st/37su2nc.

Total $216 B

15.4%

55.0%

BIG IDEAS 2020

Live Streaming Is Taking Off in New Verticals
Typically in the form of video, live streaming1 is gaining popularity globally, with a particularly strong impact on
Esports. Amazon’s Twitch is the 58th most popular site in the world, streaming more than 11 billion hours in2019 alone, according to ARK’s estimates.
Twitch Viewership(Number of Hours Watched)

Number of Hours Watched (Billions)12

36.5% CAGR
10
8
6
4
2
0
2013

18

2014

2015

2016

2017

2018

2019

[1] We consider live streaming to be web-based platforms that allow users to stream their game-play to a broader audience.
Source: ARK Investment Management LLC, 2019 based on data sourced from twitchtracker.com ; “Livestreaming - A $5 Billion Global Phenomenon.” Roundhill Investments, https://arkinv.st/2FcVUiX.
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

Total streaming revenue could grow 35% at an annual rate, from an estimated $86 billion in 2019 to roughly$390 billion in 2024.
Audio Streaming

Video Streaming
Ad-Supported

User Generated

$350

$60

$30

$300

$50

$25

$250
$200
$150

Total

36% CAGR

$100
$50

$40
$30

32% CAGR

$20
$10
$-

$-

2019
19

Live

Revenue (Billions USD)

Revenue (Billions USD)

SVOD

Game Streaming

Revenue (Billions USD)BIG IDEAS 2020

Sizing the Opportunity

2024

Cloud

$20

Total

$15

37% CAGR

$10
$5
$-

2019

2024

2019

Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019 based on data sourced from zenithmedia.com; “Newzoo's Global Games Market Report.”
Newzoo, https://arkinv.st/37su2nc; “2018 RIAA Music Industry Revenue Statistics: RIAA.” RIAA, https://arkinv.st/39BdB9S; “Livestreaming - A $5 Billion Global Phenomenon.” Roundhill Investments,
https://arkinv.st/2FcVUiX.

2024

BIG IDEAS 2020

Electric Vehicles (EVs)Four years ago, the Energy Industry Administration (EIA)
and other forecasting agencies estimated that EV sales
would total a few hundred thousand units in the early2020s. After EV sales hit 1.45 million units in 2018 andan estimated 2 million in 2019, the same agencies now
forecast roughly 6.5 million in 2024.
ARK’s thesis for the evolution of the market differs
dramatically. Based on Wright’s Law, we forecast EV
sales will be 37 million units, six-times higher than
the forecasting agencies’ consensus estimate for 2024.

Author: Sam Korus, ARK Analyst
20

BIG IDEAS 2020

EV Sales Are Increasing As Gas-Powered Auto Sales Shrink
Despite an estimated 3.1 million drop in total auto sales worldwide,1 EV sales are expected to grow significantly
during the next five years. EV sales growth could be lumpy as factories build to scale but should be robust overtime as EV adoption gains traction.
Auto Sales in 2019

Global Electric Vehicle Sales

2.5

100
80 M Units

2.

1.5

Units (Millions)

Units (Millions)

80

1.

60

40

.5

20
.

2013
Year-over-Year Growth:

21

2014

2015

2016

2017

2018

2019 (est)

60%

66%

46%

71%

79%

38%

2 M Units~2.5% Penetration
EV Sales[1] Raimonde, Olivia. “Global Car Sales Expected to Slide by 3.1 Million This Year in Steepest Drop since Great Recession.” CNBC, CNBC, 25 Nov. 2019, https://arkinv.st/35bYEYHl.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; Based on data sourced from: EV-volumes.com.

Global Auto Sales

BIG IDEAS 2020

Wright’s Law Forecasts the Decline in Battery Costs
According to Wright’s Law, for every cumulative doubling of units produced, battery cell costs will fall by 18%.
These cost declines are critical to reaching price parity with gas-powered vehicles, as the largest cost componentof an EV is its battery.
ARK’s Lithium-Ion Battery Cost Decline Model
Modeled Cost Decline

Forecast Cost Decline

Reported Cost
Prices$10 ,00 0$/kWh*$1,000

$10 0

$10

$1
10,000100,000

1,0 00,0 00

10,000,000

100,000,000

1,0 00,0 00,000

Cumulative kWh Produced

22*kWh: Kilowatt hour
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; Based on data sourced from: Avicenne Energy, International Energy Agency (IEA), and Bloomberg New Energy Finance.

10,000,000,000

BIG IDEAS 2020

Wright’s Law Has Forecast Auto Costs Accurately
For More Than 100 Years
Wright's Law Applied to Auto Costs Over the History of the Industry(Adjusted for Inflation)
Wright's
ModelFord($/hp)
Power Law
(Modeled
Cost ($/hp))

Ford Cost ($/hp)$10,0 00

Auto Unit Cost $/hp (USD)

1903
1909
1912

$1,00 01916
1927
Model A

1977

2003
2018

Model T

$100

Ford Fusion

1996

2012

$10
1,0 0010,000100,000

1,0 00,000

10,000,000

100,000,000

Cumulative Production

23

Source: ARK Investment Management LLC, 2019
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

1,0 00,000,000

BIG IDEAS 2020

EVs Are Nearing Price Parity With Gas-Powered Cars
Electric Vehicle Price Parity
250 Mile Range EV Price

Toyota Camry MSRP*$50,000$45,000$44,000$40,000

Cross-Over:EVs cost less!

$33,000$35,00 0(USD)$30,0 00
$24,000$24,000$25,000$25,000$25,000$24,000$20,000$17,000$15,00 0$10,0 00
$5,0 00
$-

2018

24

2020

2022

*MSRP: Manufacturer Suggested Retail Price
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

2024

The Energy Industry Administration (EIA) has increased its US forecasts for EV sales significantly but consistently
tapers growth beyond 2025, ignoring traditional adoption curves.
EIA Forecast of US Electric Vehicle Sales

EIA Forecast of US Electric Vehicle Sales(2015-2019)

vs. ARK Forecast
Forecasted in:

1,400

Unit Sales (Thousands)

2019

1,0 00
80 0
600
40 0

Unit Sales (Thousands)

7,000

1,20 0ARK Forecast
6,0 005,000
4,00 03,000
2,000Actual200

EIA Forecast

1,0 00
-

0
2011

25

8,000

2013

2015

2017

2019 2021 2023 2025 2027 2029

20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24

BIG IDEAS 2020

The EIA Has Revised Up Its EV Forecasts Consistently

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; “U.S. Energy Information Administration - EIA - Independent Statistics and Analysis.” EIA, https://arkinv.st/2F5SY7R.

BIG IDEAS 2020

Sizing the Opportunity
The biggest risk to ARK’s forecast is whether or not traditional automakers will be able to scale EV production.
If they do, then global EV sales could hit

37 million units in 2024.

Global Electric Vehicle Sales Forecast

37 M Units($1.1 T Revenue)

40

Units (Millions)

35
30
25
20

79% CAGR

151052 M Units02013Year-over-Year Growth:

26

2014

2015

2016

2017

2018

2019 (est)

60%

66%

46%

71%

79%

38%

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; Based on data sourced from: EV-volumes.com.

2024 Forecast

BIG IDEAS 2020

Automation

Automation encompasses industrial robots, service
robots, and automation systems. While many observers
fear that automation will destroy jobs, ARK believes itwill empower humans, increasing both productivity
and wage growth.
According to ARK’s research, automation will add$800 billion to US Gross Domestic Product (GDP) by
2024, and potentially $12 trillion by 2035.

Author: Sam Korus, ARK Analyst
27

BIG IDEAS 202028

Automation Encompasses Industrial Robots,
Service Robots, and Automation Systems
Powered by Neural Networks
Industrial Robots

Service Robots

Automation Systems

Manufacturing

Logistics, Vacuums, Delivery
Robots, Nurse Assistants

Restaurants, Production Lines

BIG IDEAS 2020

Industrial Robot Prices Are Declining
Based on Wright's Law, ARK estimates a more rapid cost decline in industrial robot prices during the next five
years compared to a forecast by the Boston Consulting Group (BCG).
ARK’s Industrial Robot Price Decline Model
BCG Price Decline

Unit Price (2018 USD)

$200,000

ARK Price Decli ne

Historic Prices$139,000
1995

1996

$72,000$33,000

2005$25,000

2010$20,000

2014

2018

$13,000
2024$2,0 00
500,000

29

Cumulative Production (Units)

5,000,000

Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019, “World Robotics.” IFR International Federation of Robotics, https://arkinv.st/36dFXVJ; Boston Consulting Group(BCG) “How Robots Will Redefine Competitiveness.” 23 Sept. 2015, https://arkinv.st/2SDew3B.

BIG IDEAS 2020

Robot Demand Has Responded to Lower Prices
While they flattened in 2019 in response to the US-China trade conflict and a slowdown in the global
auto industry, ARK expects robot sales to quadruple during the next five years, from roughly 420,000 in 2018
to 1.6 million in 2024.
Industrial Robot Price Elasticity of Demand
1996-20 02

2002 -2010

2009

2010-20 15

ARK Industrial Robot Forecast
1.8

2016-2018

1,600,000

500,000

1.4
2018

400,000
300,000

Units (Millions)

Unit Sales of Industrial Robots

1.6

2016
2014

200 ,00 0

2012

2008

100,000
1996$12 0,0 00

1998

2000

$10 0,0 00

2002

2004

$80,000

2006

1.

25% CAGR.8.6420,000

.4

2010

.2
.

$60 ,00 0$40,000$20,000$0

Unit Price of an Industrial Robot

30

1.2

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; “World Robotics.” IFR International Federation of Robotics, https://arkinv.st/36dFXVJ.

2018

2024

BIG IDEAS 2020

Service Robots Are Penetrating the Logistics Space
Since deploying its first robot in 2012, Amazon has ramped them to roughly 200,000 units in its fulfillment centerswhile increasing total employment 7x. Based on their superior economics, robots are likely to dominate the fooddelivery space as well.
Cost of Delivery

Number of Robots in Amazon's Fulfillment Centers

Robots700,000$1.80

Employees

650 K

$1.60

600,000$1.40

500,000$1.20

400,000
300,000
200 K

200 ,00 0

USD/Mile# of Robots and Employees

Compared to Total Employment at Amazon
$1.60

$1.00

95%+
cost savings

$0.80
$0.60
$0.40

100,000

$0.20

2013

2014

2015

2016

2017

2018

2019

$0.06

$Human Deli very

Autonomous Delivery
Robot

31

Source (Left Chart): ARK Investment Management LLC, 2019; Amazon SEC Filings, Amazon, https://arkinv.st/2ZCRyuT.
Source (Right Chart): ARK Investment Management LLC, 2019; Bridges, Dash. “I Made $10,378 in 1 Year Working for DoorDash Part Time.” The Rideshare Guy Blog and Podcast, 22 Aug. 2019, https://arkinv.st/37osrPo.
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

Robots Will Cause a Shift From “Unpaid” to “Paid” Labor
Automation systems can operate much of a fast-casual restaurant. Grocery shopping, food preparation,and clean-up will shift from “unpaid” tasks at home to paid jobs at fast-casual and other restaurants as wellas their suppliers.
Cost of a Meal by Location

Costs of Food to US Consumers

$14
$12

≈ $12

$3

≈ $12

Total = $2.4 T

Grocery Time Cost

$226 B Grocery Time

$8
$6

Trillions (USD)

USD

$10
Food Prep andCleanup Cost

$930 B$1.4 T
Food Prep
and Cleanup$781 B

Food Cost

Food at Home

$0$0
Home Cooked

32

Non-market activity labor cost
(67% of addressable market)

$1

$4
$2

$2

Fast Casual

Food Outside
2018the Home

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; “Food Expenditure Series.” USDA ERS - Food Expenditure Series, https://arkinv.st/2sptBve.

Food
theMarket
Home
Add Insideressab le

BIG IDEAS 2020

Sizing the Opportunity$800 billion to US GDP

Automation could add
during the next five years and $12 trillion
during the next 15 years. By 2035, GDP could hit $40 trillion, nearly 40% higher than would be the case without
automation, compounding at a 2.4% growth rate instead of 1.8%.

US GDP With and Without Automation
GDP w ith Automation

US Real GDP Growth (CAGR)
2019 - 2024

GDP Wi thout Automation
Compound Annual Growth Rate

$50

Trillions (USD)

$40
$30
$20
$10
$0
2019

2021

2023

2025

2027

2029

2031

2033

2035

2.4%

2.5%
2.0%

1.8%

1.5%
1.0 %
0.5%
0.0%

2017

33

3.0 %

GDP Growth Without
Automation

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; “The Future of Employment: How Susceptible Are Jobs to Computerisation?” Oxford Martin School, https://arkinv.st/2rFJJYW.

GDP Growth With
Automation

BIG IDEAS 2020

3D Printing

3D printing is a form of additive manufacturing that builds
objects layer-by-layer, as opposed to traditional subtractive
manufacturing that removes material from larger blocks.
3D printing collapses the time between design andproduction, shifts power to designers, and creates
products with radically new architectures and less waste,
at a fraction of the cost of traditional manufacturing.
ARK believes 3D printing will revolutionize manufacturing,growing from $10 billion in 2018 to $97 billion in 2024 at an
average annual rate of 65%.

Author: Tasha Keeney, ARK Analyst
34

BIG IDEAS 2020

Investors Seem to Be Underestimating 3D Printing
3D printing companies have not recovered from the consumer-3D printing hype of 2013-2014. As they haveentered the so called “valley of despair,” 3D printing stocks have suffered from a lack of interest, creating amismatch between the valuation of public and private companies in the space.
Google Trends "3D Printing Stocks” 1

75

50

25

35

Oct-19Dec- 19

Jun-19Aug-19Apr- 19

Feb-19Oct-18Dec- 18

Jun-18Aug-18Apr- 18

Feb-18Oct-17Dec- 17

Jun-17Aug-17

Apr- 17

Feb-17Oct-16

Dec- 16

Jun-16Aug-16

Apr- 16

Feb-16Oct-15Dec- 15

Jun-15Aug-15Apr- 15

Feb-15Oct-14Dec- 14Jun-14Aug-14Apr- 14

Feb-14Oct-13Dec- 13

Jun-130Aug-13

Google Search Trends Interest Over Time

(Category: Finance, Worldwide)
100[1] ARK used Google Search Trends to illustrate the decline in investor interest for 3D printing stocks. While this analysis is limited, it mirrors the general investor sentiment for 3D printing stocks and their price decline.
Source: ARK Investment Management LLC, 2019; Data sourced from https://trends.google.com/.

BIG IDEAS 2020

The Adoption of 3D Printing Is at a Tipping Point
In 2015, General Electric (GE) produced the first 3D printed fuel nozzle, combining 20 parts into one.1 In 2019,
the GE9X engine contained 304 3D printed parts.2 At that rate of adoption, and adjusting for the reduction incomplexity, a large percentage of the GE9X engine could be 3D printed by the late 2020s.
3D Printed Parts in One Aircraft Engine*

3D Printing Reduces The Number of Parts
Required For An Aircraft Engine

4,000

Total Part Count
250,000
200 ,00 0
150,000
100,000
50,000304
19*Note: There are 19 fuel nozzles per engine

36[1] Kellner, Tomas. “How 3D Printing Will Change Manufacturing.” GE Reports, 16 Feb. 2018, https://arkinv.st/2MQQNcJ.
[2] Donaldson, Brent. “Mission Critical: An Additive Manufacturing Breakthrough in Commercial Aviation.” Additive Manufacturing, 20 May 2019, https://arkinv.st/2ZIqYAP.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019. Data sourced from Bloomberg.

20
34

20
32

20
30

20
28

20
26

20
24

20
22

20
20

20
18

2024

20
16

2019

20
14

2015

BIG IDEAS 2020

3D Printing Enables Leaps In Manufacturing
Companies like Relativity Space use 3D printing, robotics, and AI to optimize production, improve quality,
reduce manufacturing time, lower costs, and create designs previously not possible.
Advancements in Aerospace Through Disruptive Technologies — Case Study: Terran 1 Rocket

3D Printed Rocket Manufacturing< 1,000 Parts
Traditional Manufacturing
100,000+ Parts
24 Months Build Time
48 Months Iteration Time
Human Designed Parts
Complex Supply Chain
Static Manufacturing Process

2 Months Build Time
6 Months Iteration Time
Computer Generated Design
Simplified Supply Chain

TERRAN 1 ROCKET BUILT AND FLOWNIN DAYS INSTEAD OF YEARSAI Continuously Improves
Manufacturing Process

Disrupts 60 years of aerospace by incorporating
the world’s largest metal 3D printers and AI-driven
controls to build rockets in less than one year.

Source: ARK Investment Management LLC, 2019; “Relativity Space.” Relativity Space, https://arkinv.st/2FyXfAO.
37

ARK’s research shows that 3D printing for end-use parts is the next frontier.

PROTOTYPESMOLDS & TOOLSEND-USE PARTS

Market Potential:$12.5 Billion$30 Billion$490 Billion

Current Penetration

40-50%

6%

1%

First Applications

1980’s1990’s

Early 2000’sMarket Size (Billions USD)BIG IDEAS 2020

ARK Believes 3D Printing Still Is in Its Infancy

38

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; McKinsey; Stratasys; “3D Printing History.” AV Plastics, 14 June 2018, https://arkinv.st/2TC57H1.

BIG IDEAS 2020

Sizing the Opportunity
The global 3D printing market could scale to$97 billion by 2024, compounding at a 65% annual rate.

Estimates: Global 3D Printing Market 2020 to 2025

$180-490B
by 2025$500

Billions (USD)

.
.
.

$97B

$100

65% CAGR

$80
$60
$40
$20
$0

$10B
2018

Forecast Last Updated:39

by 2024$27B
by 2023$36B
by 2024$13-21Bby 2020$17B
by 2020$20Bby 2025$21B
by 2020

CreditSuisseMorganStanley

AT Kearney

Lux Research

DeloiteErnst& Young

Wohlers

ARK

McKinsey

2013

2014

2015

2017

2016

2019

2019

2019

2013

$12B
by 2025

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019

BIG IDEAS 2020

Autonomous Ridehailing

Robots that can move people and parcels from place toplace should reduce the cost of point-to-point travel to
1/10th the cost of a taxi today. In urban areas, ARK believesautonomous ridehailing will become the norm and personal
car ownership the exception, enabling new business models.
While autonomous ridehailing should debut a year
later than promised, ARK’s research suggests that the
10-year net present value (NPV) of its cashflows is morethan $1 trillion today and should hit $5 trillion by 2024
and $9 trillion by 2029.

Author: Tasha Keeney, ARK Analysts
40

BIG IDEAS 2020

Autonomous Ridehailing Is Likely to Be Affordable
Adjusted for inflation, the cost to own and operate a personal car has not changed since the Model T rolled off
the first assembly line. ARK estimates that, at scale, autonomous taxis will cost consumers $0.25 per mile,
spurring widespread adoption.

Cost Per Mile of a Personally Owned Vehicle$1.70(2019 Dollars)

$0.70

$0.70

$0.70
$0.25

1871

41

1934

1950

2016

2024
2021

Note: ARK had estimated previously that an autonomous taxi could price at $0.35 per mile. We have refined our estimates and believe that autonomous taxis could be even cheaper, at only $0.25 per mile.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; Morton Salt Company Records, American Automobile Association (AAA).

BIG IDEAS 2020

Autonomous Platforms Could Command
Platform Fees Exceeding 30%
Although ridehailing companies take 20-30% of revenues today, autonomous technology providers could collecthigher fees as they provide more value to consumers through cheaper, safer, and more convenient services.
Moreover, autonomous platforms should evolve in geographic monopolies, eliminating some of the competitive
pressures that ridehailing companies are experiencing today.

80 %Platform Fees

30-65%
30-50%

60%

50%

50%

45%
35%

40 %

30%

30%

26%

20-25%

20-25%

25%

23%

23%

14-20%
15%

20%

11%

10%

42

Eb
ay

be
rE

A

Ts

n*

*Amazon From Third Party Sellers
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

U

az
o
Am

Ai
rb
nb

Ri
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bh
u
St
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Ro
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Ex
pe
di
a

ki
ng
Bo
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Ly
ft

or
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Ap
p

le

Ap
p

St

ne
s
iT
u

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G

ub
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Yo

uy
a
H

ro
up

on

u
G

Ro
k

Ki
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0%

BIG IDEAS 2020

The Winning Autonomous Ridehailing Platforms
Should Be Worth Roughly $1.4 Trillion Today
Based on Waymo’s and Cruise Automation’s missed deadlines for driverless commercial service, ARK pushed
out its autonomous adoption curve by one year. If commercialization were to take place one year later than we
had anticipated, future cashflows from autonomous ridehailing should be worth between $1 - $2 trillion today.
Autonomous Ridehailing Cashflows During the Next 10 Years(Estimated 10-Year Net Present Value, Cumulative)$122020 Start Date2019 Start
Start Date;
Date Original Forecast

Trillions (USD)

$10
$8
$6
$9 T

$4
$5 T

$2
$0

$1.4 T2019 (Should Be )43

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019

2024

2029

BIG IDEAS 2020

Today’s Ridehailing Companies Are Unlikely to Sustain
Current Valuations In The Autonomous Future
Ridehailing company platform fees probably will drop from 20-30% today to 1-5% as they evolve into lead generators.
The majority of fees will go to ridehailing platform providers that own and develop autonomous technology.
Ridehailing Valuations Based on Estimated Net Present Value Of

44

Ridehailing$10
Trillions (USD)

Uber
Lyft
Grab
Get
Didi
Ola
Cruise Automation
CabifyHyundai Aptiv JV
Caocao Zhuanche
YandexUCAR
Yidao
Go-JekPony.AI

Autonomous Ridehailing Cashflows During Next 10 Years$12

Ridehailing
Valuations include:$9 T

Autonomous Ridehailing Platforms

$8
$5 T

$6
$4
$1.4 T$2$0.24 T

$0.18 T2018
Ridehailing

2019
Ridehailing$0.1 T$0.5 T$0.3 T$0

2019
Should Be

2024

Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

2030

BIG IDEAS 2020

Sizing the Opportunity
ARK believes that the autonomous ridehailing opportunity should be worth more than $1 trillion dollars today,$5 trillion by 2024, and $9 trillion by 2029.
Estimated Cumulative 10-Year Net Present Value

Market Capitalization in 2019

Of Autonomous Ridehailing Cashflows

Trillions (USD)

Trillions (USD)

$8

$5 T

$6
$4
$2

$7 T

$6

$4

$2

$1.4 T$1 T$0.2 T$0

2019(Should Be)
45

$8

$9 T

$10

2024

2029

$0

Ridehailing

Automakers

Energy Sector

Note: ARK’s estimate for market capitalization is using our global adoption curve and revenue estimates, assuming software like margins and cash flow for platform operators, and discounting cash flows from 10 years forward.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019

BIG IDEAS 2020

Aerial Drones

Lower battery costs and autonomous technology should
power aerial drones. Soon, ARK believes drones will
deliver our packages, food, and even people quicker andmore conveniently than ever before. Drones shouldchange shopping behavior and reduce travel times while
potentially saving lives.
ARK believes that drone delivery platforms could
generate roughly $275 billion in delivery revenues,$49 billion in hardware sales, and $12 billion inmapping revenue by 2030.

Author: Tasha Keeney and Sam Korus, ARK Analysts
46

BIG IDEAS 2020

Autonomous Air Travel Has Become Both
Possible and Affordable
Battery technology is improving, enough so that flight reserves meet regulations, enabling air taxis and air
ambulances to take to the skies safely. In addition, machine learning improvements have enabledautonomous flight, reducing costs dramatically.
Safe Passenger Drone Range

Cost of a 10-Mile Drone Delivery**(Inclusive of Flight Reserve For Safety)$10.0 0

Safe Flight Range (Miles)

25
$8.00
20

In 2020 batteries should
accommodate 12-mile flights+ reserves for safety

15
10

$7.80

$6.00

$4.00

Distance from Manhattan to JFK*

5

$2.00

0

$-

$0.25
2000

47

2005

2010

2015

2020

Remotely Piloted

Autonomous*JFK – John F. Kennedy International Airport | **Note: Prices shown for drone technology are in the future when each technology reaches scale. While ARK estimates drone delivery services will commercialize in thenext 5-10 years, exact dates will be dependent on regulatory approval.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019

BIG IDEAS 2020

The Cost To Transport People and Things Today Should
Decline Dramatically as Drones Create New Markets
Price of Transport to Airport

Price of a 30-Minute Parcel Delivery(10 Miles)
$150

$200

$140

$195

$150

$10 0

$74

$100

$50

$0.25

$0

$50
$-

Bike Courier

Drone (at scale)

Helicopter

Price of Ambulance Trip*

Price of a 3-Mile Food Delivery$6.00$1,500$4.80$1,000$1,00 0

$4.00
$2.00

$0.20

$Drone (at scale)

$360

$500
$-

Human

48

Ai r Tax i (at scale)

Ground Ambulance

eVTOL Ambulance$150
Autonomous eVTOL
Ambulance (at scale)*Ambulance transports patient to hospital and assumes eVTOL (electric vertical takeoff and landing) transports only first responder to patient. | Note: Prices shown for drone technology are in the future when eachtechnology reaches scale. While ARK estimates drone delivery services will commercialize in the next 5-10 years, exact dates will be dependent on regulatory approval.
Source: ARK Investment Management LLC, 2019; Bridges, Dash. “I Made $10,378 in 1 Year Working for DoorDash Part Time.” The Rideshare Guy Blog and Podcast, 22 Aug. 2019, https://arkinv.st/37osrPo.

BIG IDEAS 2020

Drone Delivery Should Take a Substantial Shareof Ecommerce Volumes
Drones should make package delivery inexpensive: more purchase decisions made in-store could moveonline, pushing global ecommerce from 14% of retail sales in 2019 to 60% in 2030. At $0.25 per delivery,
autonomous parcel drone operators could be targeting a $115 billion market opportunity by 2030.
Global Share of Retail Sales

Global Parcel Drone Delivery Revenue(2019 and Forecasted)
Ecommerce (Non-Drone)

Ecommerce (Drone Delivered)$140

Other Retail$115 B

$12 0

65%

86%

33%
6%

60%

29%

14%

27%

Billions (USD)

40%

$10 0
$80
$60
$40
$20

$15 B

$0
2019

49

2024

2030

2024

2030

Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; “Pitney Bowes Parcel Shipping Index Reports Global Parcel Shipping Reaches $279 Billion in Revenue.”
Pitney Bowes, 28 Aug. 2018, https://arkinv.st/2QjSeSQ; “Data and Research on Digital for Business Professionals.” EMarketer, EMarketer, https://arkinv.st/2trGQeE; Total Retail Sales of Consumer Goods in December
2017, National Bureau of Statistics of China, 25 Jan. 2018, https://arkinv.st/36mBKz6; “Monthly Sales for Retail and Food Services by Kind of Business: Retail Sales by Kind of Business, Millions of Dollars, Seasonally
Adjusted.” FRED, Federal Reserve Bank of St. Louis, https://arkinv.st/2ZJWSN4.

BIG IDEAS 2020

Drones Could Cause an Inflection in Food Delivery
ARK believes that food is a good candidate for drone delivery, as it is lightweight and time sensitive.
We estimate that revenue from drone food delivery could total roughly $116 billion globally by 2030.
Global Food Delivery as a Percent Of Total Food

Global Food Drone Delivery Revenue

Spending With and Without Drones$140(2019 and Forecasted)$116 B$12 0

Add itional Food Delivery Spend With Drones
Total Food Delivery Spend Wi thout Drones

19%

Billions (USD)

$10 0
$80
$60
$40

2%

1%
2019

50

22%

$20

10%
2024

2030

$7 B

$0
2024

2030

Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; “Euromonitor International: Strategic Market Research, Data & Analysis.” Euromonitor International |Strategic Market Research, Data & Analysis, https://arkinv.st/2udM3HB; “Food Expenditure Series.” USDA ERS - Food Expenditure Series, https://arkinv.st/39AmNLF; “Measurement of Food Away From Home (FAFH) In
Household Surveys.” World Bank Surveys, Nov. 2017, https://arkinv.st/2FaRyZV; Food Data Collection in Household Consumption and Expenditure Surveys. The Inter-Agency and Expert Group on Food Security,
Agricultural and Rural Statistics and Endorsed by the Forty-Ninth Session of the United Nations Statistical Commission, 29 Mar. 2018, https://arkinv.st/36mElJm; Fabiosa, Jacinto F., "The Food-Away-from-Home
Consumption Expenditure Pattern in Egypt" (2008). CARD Working Papers. 503. https://arkinv.st/2ZLnBJt.

BIG IDEAS 2020

Electric Air Taxis Should Provide Faster and Cheaper
Transport, Especially Above Traffic Bottlenecks
Cost and Convenience of Travel Options From Manhattan to JFK*
Cost

Ti me (min)

$250

$200

$195

$150

$100

$74

$50
5min

$65

80min

70min

18min

60min

$10

$8

$Helicopter

Ai r Tax i(at scale)

51*JFK – John F. Kennedy International Airport
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019

Taxi

Autonomous Taxi
(at scale)

NYC Subway

BIG IDEAS 2020

Electric Air Taxis Could Be a Cost-Effective Way
to Save Lives
Each year in the US roughly 350,000 cardiac arrests occur outside of hospitals, with only 12% of the victims
surviving. Drones could save up to 20,000 lives annually by decreasing response times. Based on the present valueof lives saved, if the air ambulance service were to cost an additional $150 per patient, the annual cost would be anincremental $2.8 billion in the US. The benefit associated with lives saved would be more than six times the cost.
Survival Rate by Ambulance Response Time
Bystander CPR

Adding Air Taxi EMTs to Existing Ambulance Fleet:
Estimated Lives-Saved and Cost Benefit

No Bystander CPR$25

Electric Air
Ambulance

20%

$20

15%

Billions (USD)

30-Day Survival Rate

25%

GroundAmbulance

10%
5%
0%

$15
$10
$5

Total Annual
Ambulance
Expenditure,$20 B

Present
Value ofLives Saved,$18.3 B

$0
0

1

2

3

4

5

6

7

8

9

10

Ambulance Response Time From 911 Call (min)52

Additional Annualized
Cost to Add Air Taxi
EMTs, $2.8 B

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019

11

12

13

Costs of Ambulance Service

Ai r Tax i EMT Benefit

BIG IDEAS 2020

Sizing the Opportunity

Drone delivery platforms could generate $275 billion in delivery revenue, $49 billion

in hardware sales, and $12 billion in mapping revenue by 2030.
Delivery Revenue
Parcel Drone

Food Drone

Air Tax i

Parcel Drones

$22B
$7B

$115B

$50

$30
$20
$10

$15B

$0

2024

2030

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019

$8B

$40

$6B
$66M
$1B
$5B

Billions (USD)

Billions (USD)

$116B

$150
$100 $400M

53

Mapping Revenue
Ai r Tax is

Food Drones

$49B

$200

$0

Food Drones

$44B

$250

$50

Parcel Drones

$275B

$300

Billions (USD)

Drone Hardware Sales

$16B

$25B

2024

2030

$16

$12B

$12

$1B

$8
$4
$0

$6B

$300M
$6B

$700M

2024

2030

BIG IDEAS 2020

Next Generation DNA Sequencing

Next-generation DNA sequencing (“NGS”) is the driving
force behind the genomic revolution. Since 2003 thecost to sequence a human genome has dropped fromnearly $3 billion to less than $1,000.
ARK believes that as costs continue to drop, NGS will
become a standard of care in oncology. It will introduce
more science into healthcare decision-making, enable
personalized medicine, and accelerate drug discovery.
ARK estimates that NGS revenues will grow 43%
at an annual rate, from $3.5 billion last year to$21 billion in 2024.

Author: Simon Barnett, ARK Analyst
54

BIG IDEAS 2020

The Cost of DNA Sequencing Is Declining Precipitously
ARK believes that NGS costs are declining at a rapid rate, following Wright’s Law: for every cumulative doublingin units produced, costs decline 40%. If NGS had followed Moore’s Law since 2009, the cost to sequence a wholehuman genome today would be $100,000—more than two orders of magnitude higher than the $1,000 thatWright’s Law predicted.
Cost Decline Comparison: Moore's Law vs. Wright's Law
Veritas Genetics ($599)

Moore's Law

Wright's L aw

$100,000,000$10,000,000

2001$1,000,000

2009
(USD)

Cost to Sequence a Human Genome*

Sequencing Cost

$100,000$10,000$1,000$100

2019

Early 2020’s

$10
1

10

100

1,000

10,000100,000

1,000,000

10,000,000

Cumulative Human Genomes Sequenced

55*Human genome data equivalents equate to 96 gigabases of sequence data.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; “The Cost of Sequencing a Human Genome.” Genome.gov, https://arkinv.st/2SImMzm.
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

100,000,000

BIG IDEAS 2020

As Costs Decline, Demand for Sequencing Is Surging
ARK believes that the number of whole human genomes sequenced per year should scale 110% at an annual
rate, from roughly 2.6 million in 2019 to 105 million in 2024, thanks to the clinical adoption of moleculardiagnostics. Among these sequencing-intensive tests are: liquid biopsies, solid tumor profiling, germline testing,immune-oncology, and non-invasive prenatal screening.
Annual Sequencing Volume Is Accelerating as NGS Enters Clinical PracticeAnnual Sequencing Volume

ARK Estimate (2024)

Genomes Sequenced Per Year

1,000,000,000
100,000,000
10,000,000

105 Million
Genomes in 2024

1,000,000
100,000
10,000

2.6 Million
Genomes in 2019

Illumina (ILMN)
Acquires Solexa (Jan. 07) 1

1,000
100
10
1

Apr- 01

56

Jan-04

Oct-06

Jul-0 9Apr- 12Dec- 14

Sep-17

Jun-20Mar-23[1] Illumina combined its technology with Solexa's to commercialize the first wave of NGS instruments.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; “The Cost of Sequencing a Human Genome.” Genome.gov, https://arkinv.st/2SImMzm.
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

Dec- 25

BIG IDEAS 2020

Next Generation Sequencing Should Transform
Clinical Oncology
NGS enables clinicians to gauge an individual’s risk of cancer, treat diagnosed patients, and monitor disease
recurrence more precisely.

Undiagnosed
Patients

Patients in
Remission

Combined with other electronic
healthcare data, genetic information
could identify cancer in Stage 1.

NGS enables sophisticated tumor
profiling and precision therapies
throughout the course of treatment.

NGS can monitor patients inremission noninvasively andfrequently to identify recurrences.

Germline Risk Assessment

Somatic Tissue Testing

Patient-Centric Monitoring via
Liquid Biopsy

Liquid Biopsy for Advanced Disease

Recurrence Monitoring via
Liquid Biopsy

Less-Invasive Tissue Profiling

Source: ARK Investment Management LLC, 201957

Diagnosed
Patients

Therapy Matching

BIG IDEAS 2020

Liquid Biopsies Add to Oncologists’ Toolkits
Liquid biopsies sequence tumor-derived DNA fragments (ctDNA) circulating in the bloodstream. Oncologists
use this information, matching patients to therapies without the need for invasive tissue biopsies. Clinical trials
are under way to increase the utility of liquid biopsies, not only to screen for cancer but also to monitor patientsin remission for recurrences. As a result, sequencing intensity is increasing.
Recurrence Monitoring Alone Could Magnify

Liquid biopsies are sequencing-intensive,
meaning that samples need to be analyzed
many times for an accurate result.

120

104 M

100
(Millions)

Human Genome Equivalents*

Annual Sequencing Volume by Roughly 40X**

80

67 M

60
40
20

3M

4.5 M

Bladder

Prostate

12 M

18 M

BreastLung

Colorectal

TOTAL*Human genome equivalents equate to 96 gigabases of sequence data. | **Full penetration of 104 million human genomes is equal to a 40x increase in annual sequencing intensity as measured in 2019 (2.6 million human genomes).
Source: ARK Investment Management LLC, 2019; “Potential Utility of Liquid Biopsy as a Diagnostic and Prognostic Tool for the Assessment of Solid Tumors: Implications in the Precision Oncology.” Journal of Clinical Medicine, 18
58

Mar. 2019, https://arkinv.st/359hcZD; Chamie, Karim, et al. “Recurrence of High-Risk Bladder Cancer: a Population-Based Analysis.” Cancer, U.S. National Library of Medicine, 1 Sept. 2013, https://arkinv.st/39w7aVy; “Bladder Cancer.”Mayo Clinic, Mayo Foundation for Medical Education and Research, 22 Dec. 2017, https://arkinv.st/2rJ3v5P; “Survivorship Care Plans.” American Cancer Society, https://arkinv.st/36bTzAY.

DNA Sequencing Market
ARK believes that the average price to sequence awhole human genome will fall to roughly $200 by 2024.1$25

Based on Wright’s Law, ARK estimates that NGS
revenues could grow at an annual rate of 43%, reaching$20$21 billion in 2024.

$21 B
Total Addressable Market (USD)BIG IDEAS 2020

Sizing the Opportunity$15

43% CAGR$10$5$3.5 B$0[1] ARK adjusted its previous cost of $100 by 2023. We believe market leaders in this space are not loweringcosts as quickly as they could. In addition, the average selling price is inclusive of labor, hardware amortization,
consumables and other associated costs, as the National Institutes of Healthcare (NIH) recently delineated.
59

Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019

2019

2024

BIG IDEAS 2020

Biotech R&D Efficiency

The convergence of Artificial Intelligence (AI),
Next Generation DNA Sequencing (NGS) and CRISPR
gene-editing has the potential to boost the efficiencyof drug development radically. It should shorten
development timelines, reduce failure rates, andincrease returns on R&D in the search for disease cures.
ARK’s research shows that the convergence of AI, NGS,
and CRISPR gene-editing could add trillions to themarket capitalization of the Biotech and Pharmaceuticalindustries, while creating a more efficient healthcare system.

Author: Simon Barnett, ARK Analyst
60

BIG IDEAS 2020Three Technological Advances Could Boost the
Efficiency of Drug Development Radically
Next Generation Sequencing

Artificial Intelligence• Sequences faster and cheaper, with higher fidelity• Accelerates the discovery of drug candidates• Guides patients toward targeted treatments• Increases clinical trial participation• Improves clinical trial selection• Lowers the cost of sequencing and analysis

NGS

AI

CRISPR Gene-Editing• Edits faster and cheaper, with more capability• Enables earlier experimentation• Turns chronic conditions into potential cures

CRISPR

Cures for chronic conditions
Fewer failures in drug development
Shorter development timelines

Source: ARK Investment Management LLC, 201961

BIG IDEAS 2020

Next Generation DNA Sequencing (NGS) Is Criticalto Clinical Trial Success Rates
Drug development companies are making clinical trials more efficient by using NGS to find and enroll patients
likely to respond. Half of clinical trials and 80% of oncology trials now collect genetic information. ARK believes
clinical trials using genetic diagnostics will result in fewer failed drugs and will increase capital efficiency.
Genetic Diagnostics Can Lower Failure Rates
by 45% in Phase III Lung Cancer Trials

Failure Rate

75%

72%

69%

Failure Rate
Reduction

Failed Drugs

Total Cost of R&D 1

0

28

$720

10

18

$520

25

9

$350

45

3

$220

(%)

60%
45%

38%

30%
15%
0%
OverallTargeted Drugs*

Genetic Diagnostic
Drugs*

62

The Cost to Produce One FDA-Approved Drug
Given Reduced Failure Rates(#)(Million USD)

Next generation sequencing diagnostic tests, in combination
with artificial intelligence, should reduce clinical trial failure rates
materially at every stage of the drug development process[1] Assumes 10% cost of capital.
*A lower failure rate constitutes an improvement in clinical trial success. Targeted drugs have a mechanism of action that usually is genetic in nature and tailored to a patient.
Source: ARK Investment Management LLC, 2019; Falconi, Adam, et al. “Biomarkers and Receptor Targeted Therapies Reduce Clinical Trial Risk in Non–Small-Cell Lung Cancer.” Journal of Thoracic Oncology,
Elsevier, 20 Nov. 2015, https://arkinv.st/35AnSA2.

BIG IDEAS 2020

Artificial Intelligence (AI) Should Reduce
the Time-to-Market for New Therapies
AI is being deployed increasingly to address major diseases and to boost efficiency throughout the healthcare
ecosystem. AI should increase clinical trial throughput by improving patient recruitment and retention,
potentially cutting trial times by more than half.
Publication Volume of Machine Learning and Deep

Cost To Develop A Single Successful Drug

Learning Papers Focused on Major Diseases1
3,50 03,0 002,500
2,000
1,50 01,0 00500

63Total Cost of R&D 2

0

$720

10

$675

25

$610

45

$535

(%)

(Million USD)

The combination of AI, DNA sequencing, and gene editing should improve
clinical trial speed and lower cost-of-capital adjusted R&D costs.

20
19

20
17

20
15

20
13

20
11

20
09

20
07

20
05

20
03

20
01

19
99

19
97

19
95

0

Time-to-Market Reduction[1] Academic papers mentioning “machine learning” or “deep learning” and one of the top 5 mortal diseases in the US in the title or abstract[2] Assumes 10% cost of capital.
Source: ARK Investment Management LLC, 2019; “Home - PubMed - NCBI.” National Center for Biotechnology Information, U.S. National Library of Medicine, https://arkinv.st/2ZZk9L4.

Gene editing promises to transform our ability to create and deliver gene and cell therapies. To date, only 10
therapies have been FDA approved—three of them targeting cancer—but more than 2,000 trials have beenregistered. Approved by the FDA in the last two years, the first three gene therapies demonstrated high rates ofcomplete remission in liquid tumors at a low cost per "life-year”.1
Average Cost of Chronic Cancer

Average Life-Years Gained by

Average Cost of Cancer Care

Treatment2 vs. Gene Therapies

Treatment Paradigm

Per Life-Year Gained

$150

$158

$-

Average
CancerCost
GeneofTreatments
CancerTreatment ACTTherapies
Therap ies

2014- 2019
64

4.0
+3x

3.0
2.0

1.6

1.0
0.0

Average
Chronic Cancer
Cost of

4.9

5.0

$450

Chronic Tr ea tme nt s

Immunothe rapie s/ Gene The ra pie s

Chronic Cancer
Treatments

Cancer Gene
Therapies(Thousands USD)

(Thousands USD)

Cost per Treatment$300

Gene Therapies
likely will be a one-timeadministered cure.

Cost per Treatment

$424

$450

Incremental Life-Years Gained

BIG IDEAS 2020

Curing Disease Comes at a Higher Sticker Price But a
Much Better Bang For the Buck

$300

$150

While the list price is 2-3x
higher, Gene Therapies canbe more cost effective
per-life-year gained.

$134

$100

$Average
Per AverageGene
Cost of ACT
ChronicCost
Cancer
Therapies
LifeTreatment
Year Gained per Life
Year Gained
2014-2019[1] Life-year: Year of survival while on therapy. | [2] Chronic cancer treatments include treatments approved 2014 to 2019.
Source: ARK Investment Management LLC, 2019; Biologics Evaluation and Research. “Approved Cellular and Gene Therapy Products.” U.S. Food and Drug Administration, FDA, https://arkinv.st/37LrKQh; Shahryari,
Alireza, et al. “Development and Clinical Translation of Approved Gene Therapy Products for Genetic Disorders.” Frontiers, Frontiers, 20 Aug. 2019, https://arkinv.st/39MZOxg.

BIG IDEAS 2020

The Combination of Sequencing, Editing and AI Could
Reverse Decaying Returns on Therapeutic R&D
A marginal increase in clinical trial success rates coupled with an increase in trial throughput and the premium
pricing afforded to curative therapies could catalyze returns to R&D not seen since the biotech revolution.
Pharma and Biotech: Returns on Drug R&D1 and Potential Trajectories(5 Year Moving Average)
40 %
35%

The biotech revolution, triggered by the discovery ofrecombinant DNA technology and signaled by Genentech’s
1980 IPO, spurred 2 decades of productive R&D spend

Generics, consolidation, and a lack of disruptive
innovation lead to “risk aversion, promises with no
obligation to deliver, and bureaucratic inertia.”230%

2x pricing for curing
chronic conditions
+

25%
20%

25% time to market
reduction+
10% trial phase
failure reduction

15%
10%
5%

Potential continued R&D returndecay without disruptive technology

0%
1984

65

1988

1992

1996

2000

2004

2008

2012

2016

2021

2024

[1] Returns on Drug R&D = The rate of return, less the risk-free rate, on the R&D dollars spent (inclusive of drug failures) in the years leading up to drug releases and associated present value of earnings in any given year.
[2] Garnier, J-P. 2008. Rebuilding the R&D Engine in Big Pharma. Harvard Business Review May 2008.
Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; Garnier, Jean-Pierre. “Rebuilding the R&D Engine in Big Pharma.” Harvard Business Review, 1 Aug. 2014, https://arkinv.st/37JClLp.

BIG IDEAS 2020

Sizing the Opportunity

add $9 trillion to the market capitalization

Improvements in R&D efficiency couldof therapeutics companies during the next 5 years.

Projected Therapeutic Market Capitalization by 2024*

$14

22%
Return on R&D

Trillions (USD)

$12

$4 T

$8

$9 T

$6

7%
Return on R&D

$4
$2
$0

Revenue (Billions)66

15%
Return on R&D

$10

$2 T

$5 T

$3 T

2019

Without Disruptive Technology

Failure rate reduction of 10%

Time-to-Market Reduction by 25%

$460

$690

$1,700$2,500(DNA Sequencing)(AI and Other Technology)*Assumes no change in price to sales multiple for the biotech sector, market cap expectations based on expected incremental sales generated from associated R&D spend accounting for likely revenue declines frompatent and exclusivity expirations. Based on extensive analysis and reconstruction of historical R&D spend and associated revenue yields. | Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; Garnier, Jean-Pierre. “Rebuilding the R&D Engine in Big Pharma.” Harvard Business Review, 1 Aug. 2014, https://arkinv.st/37JClLp.

BIG IDEAS 2020

Digital Wallets

According to ARK’s research, digital wallets will be valued
at a premium to retail banks and, thanks to their low costof customer acquisition, will offer banking services to low
income earners in a way that traditional banks cannot.
Given ARK’s estimate of 220 million digital wallets
in the US by 2024, if every user were to be valued
according to the lifetime value of traditional bankcustomers, the digital wallet opportunity
could be worth more than $800 billion.

Author: Maximilian Friedrich, George Whitridge, ARK Analysts
67

BIG IDEAS 2020

In China, Mobile Payments Are 2.5x the Size of GDP
Third-party mobile payment transactions in China grew from 10% of GDP in 2014 to nearly 250% in 2019,
compounding at a 107% annual growth rate. In ARK’s view, global mobile payments will be a multiple oftoday’s $87 trillion in global GDP.

China’s Mobile Payment Transactions vs. China’s GDP

68

$15T

$26T

$34T

$0.9T

$1.9T

2014

2015

2016

2017

2018

2019

$10.4T$11T$11.1T$12.1T$13.6T$14.1T$9T

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019; ARK Estimates; "World Economic Outlook Database, October 2019". IMF.org. International Monetary Fund. 15 October 2019; “GDP – China”.
World Bank.org. World Bank. 13 December 2019; “China’s Third-Party Mobile Payment Market Soared 58.4% in 2018”. IResearchChina.com iResarch. 6 May 2019.

BIG IDEAS 2020

In the US, Digital Wallet Adoption is Occurring
2x Faster Than Social Media Took Off
With network effects that appear stronger than those of social media, digital wallets are penetrating different
age groups in the US in half the time that it took social media 10 years ago. Children seem to welcome
parents into their payment ecosystems.
Social Media Adoption in the US:

Peer-to-Peer Payment Services Adoption in the US:
2017 - 20182006 - 2012
18-29

30-49

50-64

18-24

65+

25-34

35-44

45- 54

55-64

65+

100%
2 Years

2 Years80 %1 Year
1 Year

2 Years

1 Year

67%

65%
57%

55%

60%

42%

41%
40 %

37%

30%
22%

22%
20%

12%

12%

0%
2006
69

2007*
2007

2008

2009

2010

2011

2012

2017

2018

*Note: Pewresearch.org did not release data on the social media adoption in the US for the year of 2007
Source: ARK Investment Management LLC, 2019. “2018 TSYS U.S. Consumer Payment Study”. TSYS.com TSYS. 18 April 2019; “Social Media Fact Sheet”. Pewresearch.org. Pew Research. 12 June 2019.

BIG IDEAS 2020

Venmo Hosts the Largest Consumer FinanceApplication in the US
According to ARK's research and with more than 52 million annual active users, PayPal’s Venmo has become thelargest consumer finance application in the US. Square’s Cash App ranks as number four, behind JP Morgan andBank of America.
Top 10 Financial Institutions by Number of Active Digital Users (2019)*
Venmo
JP Morgan Chase
Bank of America
Cash App
Wells Fargo
Citibank
Capital One
US Bank
PNC Bank
TD Bank
0

70

10,000,000

20,000,000

30,000,000

40 ,00 0,0 00

50,000,000

60,0 00,000*Data Source: Estimate of Annual Active Users for Venmo, Bank of America, Cash App, Citibank, Capital One, US Bank, PNC Bank, TD Bank. Estimate of Quarterly Active Users for JPMorgan Chase, Wells Fargo.
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.
Source: ARK Investment Management LLC, 2019. Company information and ARK estimates. Estimate of Annual Active Users for Venmo, Bank of America, Cash App, Citibank, Capital One, US Bank, PNC Bank, TD Bank.

BIG IDEAS 2020

Digital Wallets Are Valued at a Discount to Banks
Public markets are valuing digital wallets, such as Square’s Cash App, at a significant discount per user toprivate fintech valuations. ARK believes that, at maturity, a digital wallet user should be valued at roughly$3,650, similar to a retail bank customer.
Valuation Per Active User (USD): Private Fintech Startups vs. Public Digital Wallet Providers$3,000$2,850$2,780$2,700$2,560$2,170$2,000$1,830$710$1,000$0

Public Digital Wallet
Providers

Monzo

N26

Revolut

Chime

Robinhood

SoFi

Dave

$570

Moneylion$540

Acorns$150$55

SquareCash App

Venmo

Valuation Per Customer Across Revenue Segments (USD): Representative Retail Banks in the US$4,000$3,650$1,930$820$2,000

$0

71

$510
Total Valueper Customer

Checking & Saving

Credit Card

Mortgage

$230

$160

Auto & Other Lending

Asset Management

Source: ARK Investment Management LLC, 2019. Company Information, ARK Estimates. For Cash App and Venmo using Square’s and PayPal’s price-to-sales multiple applied to estimated Cash App and Venmo revenue anddivided by ARK’s MAU (Monthly Active Users) estimate. For private Fintechs using last valuation divided by ARK’s MAU estimate. | Representative Retail Banks: ARK Estimates based on JP Morgan Chase, Wells Fargo, US Bank, PNC
Bank, Bank of America 2018 Annual Reports. This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

Digital Wallets Are Taking Share in theConsumer Credit Market
Fintech companies like LendingClub and Sofi have captured 39% of the unsecured consumer loan market. According
to ARK’s research, digital wallets will reduce the amount of revolving credit card debt sitting on bank balance sheetsfrom $740 billion in 2018 to $483 billion by 2028. As a result, interest income on banks’ credit cards is likely to be cut
in half during the next five to ten years.
Total Unsecured Consumer Debt in US
Banks' Balance Sheet

Credit Card Securitizati on

Digital Wallets

Unsecured Fintec h Loans

Unsecured L oans

$1,500Billions (USD)$1,250$1,000
$750
$500
$250
$0
1995

72

1998

2001

2004

2007

2010

2013

2016

2019

2022

2025

2028

Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; “US ABS Issuance and Outstanding.” Securities Industry and Financial Markets Association, 6 Dec. 2019,https://arkinv.st/2sJ7gJf; “Board of Governors of the Federal Reserve System.” The Fed - Consumer Credit - G.19, https://arkinv.st/2FrbOqe.
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

Sizing the Opportunity

In the US, digital wallets could be valued at$800 billion by 2024, 27x the $29.5 billion today.

Digital Wallet Users in the US

Digital Wallet Users (Millions)

300
250
200
Estimated 220 million digital wallet users in

150

the US by 2024, valued at $3,650 (same as a100

traditional bank’s customer lifetime value)

27% CAGR

equals a $800 billion opportunity.

50
0
2014

73

2015

2016

2017

Forecasts are inherently limited and cannot be relied upon.
Source: ARK Investment Management LLC, 2019

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

BIG IDEAS 2020

BitcoinBecause of bitcoin, we are witnessing a global battle
among monetary systems, both sovereign and nonsovereign. As an open, neutral, and permissionlessglobal monetary system with no reliance on the State,
bitcoin is in a good position to win this battle.
If it does, ARK believes the result will be measured intrillions, more than an order of magnitude higher thanits $150 billion network value* today.

*As of publication 01/14/2020

Author: Yassine Elmandjra, ARK Analyst
74

BIG IDEAS 2020

We Are Witnessing a “Cambrian Explosion”
of Monetary Systems
Before the creation of bitcoin, a non-government backed monetary system seemed neither feasible nor imaginable.

Pre-Bitcoin

Post-Bitcoin

An inextricable link
between money
issuance and theState.

The introduction ofmoney as a private
initiative.

The absence of afree market in money.
State exploitationof the physicallimitations of
non-sovereign money
like gold.

75

The rise of digitally
native non-sovereign
monetary systems.

A Cambrian
Explosion

Viable forms ofself-custody andsovereign wealthownership enabled
by public-key
cryptography.

Source: ARK Investment Management LLC, 2019
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

Today, a Global Battle Among Monetary Systems,
Both Sovereign and Non-sovereign, Is Underway
In the long run, ARK expects that the winning monetary systems will ensure:

1. Money will be transferred and stored seamlessly.
2. Money will not be diluted arbitrarily.
3. Money will not be frozen or seized.
4. Money supply will be auditable, and transactions will not be censored.
5. Record of transactions will be secure and immutable.

As open, neutral, and permissionless global monetary systems with no reliance on the State,
cryptocurrencies appear to be best equipped to win this battle.
Source: Mahmudov, Murad. Assurance Theory of Money - TFTC, 26 June 2018, https://arkinv.st/2FsGwz9.
76

Adjusted Cumulative

Assurance 1: Money will be transferred and stored seamlessly.
The Bitcoin network has transferred securely
more than $2 trillion of value. The barriers totransacting on Bitcoin are low, the only
requirement being possession of a private key.

$3
Trillions (USD)BIG IDEAS 2020

Among Cryptocurrencies,
Bitcoin Is Well Positioned to Satisfy These Assurances
Bitcoin Transactions Volume

$2
$1
$0
2010

Based on data sourced from: “Network Data Charts.” Coin Metrics, https://arkinv.st/37tGseJ.
Source: ARK Investment Management LLC, 2019

2019

Bitcoin (Millions)

20
15
10

Cumulaltive bitcoin issuanc e
Supply Cap

5

Projec ted bi tc oi n issuance
0
2009

77

2016

Bitcoin’s Monetary Policy

Assurance 2: Money will not be diluted arbitrarily.
All units of bitcoin have been created according
to a mathematically metered, predictable,and predefined schedule. The supply of bitcoin is
scarce, capped at 21 million units. Approximately
18 million units have been created with the current
issuance growth rate set to halve in May 2020.

2013

2013

2017

2021

2025

BIG IDEAS 2020

Among Cryptocurrencies,
Bitcoin Is Well Positioned to Satisfy These Assurances | CONT.
Assurance 3: Money will not be frozen or seized.

Assurance 4: Money supply will be auditable.

Bitcoin combines elliptic curve
cryptography and secure custody toenable the strongest form ofjurisdiction-agnostic property rights.

By running a full node, users are free tovalidate transactions and audit supply.
Decision-making in Bitcoin is not
subject to a centralized authority:
anyone can make a bitcoin transaction
permissionlessly.

Assurance 5: Record of transactions will be secure and immutable.

78

Bitcoin

Ethereum

Bitcoin Cash

Litecoin

100
1
0.01
0.0001
Ju
l10
M
ay
-1
1
M
ar
-1
2
Ja
n
-1
3
N
o
v13
Se
p14
Ju
l15
M
ay
-1
6
M
ar
-1
7
Ja
n
-1
8
N
o
v18
Se
p19

Billions (USD)

Bitcoin’s annual miner revenue, or ledger
costliness*, is the highest of any cryptonetwork,
surpassing $5 billion in 2019 and making up
roughly 80% of total miner revenue in 2019, asshown on the right. Bitcoin recipients can havehigh confidence that, once embedded in a few
blocks, a transaction is unlikely to be reversed.

Annualized Miner Revenue Across Cryptocurrencies*The term “ledger costliness” refers to the amount of compensation miners receive per unit of time.
Source: ARK Investment Management LLC, 2019; Based on data sourced from: “Network Data Charts.” Coin Metrics, https://arkinv.st/37tGseJ; Carter, Nic. Medium, 22 July 2019, https://arkinv.st/36OUw2x.

BIG IDEAS 2020

Bitcoin Is Gaining Credibility In the Financial Community
EntityMarket Validation
Portfolio Allocation: Cambridge Associates recommends that institutional investors
begin exploring cryptoassets, citing a likely rise in institutional investor exposure.

Custody: Institutional appetite has fueled the demand for regulated custodialservices, with institutions like Fidelity seeking to meet that demand.
Price Discovery and Market Infrastructure: Bakkt’s physically delivered futurescontract now serves as a benchmark determined by a trusted price discovery process
upon which institutional investors can rely.
Support for Open Source Development: Square launched the first open source Bitcoin
initiative, potentially a precursor of open source development from other institutions.

79

Source: ARK Investment Management LLC, 2019; “Latest Research & Perspectives.” Cambridge Associates, Feb. 2019, https://arkinv.st/359leRH; Fidelity Digital. “Custody in the Age of Digital Assets.” Medium,
Medium, 31 Jan. 2019, https://arkinv.st/36bzk6p; Bakkt. “We Have Liftoff: a Milestone for the Industry.” Medium, Bakkt Blog, 25 Sept. 2019, https://arkinv.st/2tdbmZY;
De, Nikhilesh. “Square Is Hiring New Crypto Engineers - And It Wants to Pay Them in Bitcoin.” CoinDesk, 20 Mar. 2019, https://arkinv.st/36bie8t.
This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. Any references to particular securities are for illustrative purposes only.

BIG IDEAS 2020

Sizing the Opportunity
Currency Demonetization:

Digital Gold:

Protection Utility:

Bitcoin as a potential medium of
exchange and catalyst for currency
demonetization could evolve
quickly in emerging markets.

Bitcoin improves upon gold’s
limitations as a store of value: it ishighly portable, strictly scarce, andpublicly auditable.

A sensible allocation to bitcoin asprotection against asset seizure
should approximate the probabilityof an asset seizure during an
individual’s lifetime.

$9 trillion x 15%$46 trillion x 5%

Gold
Market Cap.

Global Wealthof HNWI***

Estimated Present Value*$40 trillion x 5%
Sum of M2
Outside of
Top 4 Countries**

Market Share$1.1 Trillion

80

P (Bitcoin
replacing Gold)$800 Billion

P (Asset Seizure
over 50 years)$1.3 Trillion*Assumes a five-year takeover time, 10% required return, and 9% dilution. Dilution is defined as Bitcoin’s inflation rate over the next 5 years consistent with its predetermined supply schedule.
**M2 is a measure of the money supply that includes cash, checking deposits, and easily convertible near money. M2 is a broader measure of the money supply that M1, which just include cash and checking deposits.
***HNWI (High Net Worth Individual) is defined as a person with investable assets in excess of $1 million USD.
Forecasts are inherently limited and cannot be relied upon. | Source: ARK Investment Management LLC, 2019; “This Time Is Different-Data.” Harvard University, 2009, https://arkinv.st/36de9Rd.

BIG IDEAS 2020

Disclosure
For more research on disruptive innovation visit www.ark-invest.com©2020, ARK Investment Management LLC. No part of this material may be reproduced in any form, or referred to in any other publication, without the express
written permission of ARK Investment Management LLC (“ARK”).
Please note, companies that ARK believes are capitalizing on disruptive innovation and developing technologies to displace older technologies or create newmarkets may not in fact do so and/or may face political or legal attacks from competitors, industry groups, or local and national governments.
ARK aims to educate investors and to size the potential opportunity of Disruptive Innovation, noting that risks and uncertainties may impact our projections andresearch models. Investors should use the content presented for informational purposes only, and be aware of market risk, disruptive innovation risk, regulatory
risk, and risks related to Deep Learning, Digital Wallets, Battery Technology, Autonomous Technologies, Drones, DNA Sequencing, CRISPR, Robotics, 3D Printing,
Bitcoin, Blockchain Technology, etc.
The content of this presentation is for informational purposes only and is subject to change without notice. This presentation does not constitute, either
explicitly or implicitly, any provision of services or products by ARK and investors are encouraged to consult counsel and/or other investment professionals as
to whether a particular investment management service is suitable for their investment needs. All statements made regarding companies or securities arestrictly beliefs and points of view held by ARK and are not endorsements by ARK of any company or security or recommendations by ARK to buy, sell or holdany security. Historical results are not indications of future results. Certain of the statements contained in this presentation may be statements of future
expectations and other forward-looking statements that are based on ARK's current views and assumptions and involve known and unknown risks anduncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The matters
discussed in this presentation may also involve risks and uncertainties described from time to time in ARK's filings with the U.S. Securities and Exchange
Commission. ARK assumes no obligation to update any forward-looking information contained in this presentation. Certain information was obtained fromsources that ARK believes to be reliable; however, ARK does not guarantee the accuracy or completeness of any information obtained from any third party. ARK
and its clients as well as its related persons may (but do not necessarily) have financial interests in securities or issuers that are discussed.
ARK Investment Management LLC
3 E 28th Street, 7th Floor, New York, NY 10016
ark@ark-invest.com
81