Wood said in a Sunday post on X that it was “sad if not damning” that proxy advisory firms, which make recommendations for how shareholders should vote during companies’ annual meetings, have so much influence. Wood’s comments come after two of the most important proxy firms, Institutional Shareholder Services (ISS) and Glass-Lewis, urged shareholders to reject during Tesla’s annual meeting on Nov. 6 the giant pay package that would give the world’s richest man 29% of the company, up from about 13% now.

Wood particularly criticized the relationship between these proxy firms and index funds, which have an outsized influence over voting because of the large number of shares they control for their investors. Each shareholder gets a certain number of votes based on how many shares they own. Yet, large institutional investors, including index funds, control massive amounts of shares held by their investors, which gives them sway over voting.

“Index funds do no fundamental research, yet dominate institutional voting. Index-based investing is a form of socialism. Our investment system is broken,” she added.

While Wood claims index funds don’t do research, their parent companies absolutely do. The three largest index funds in the world are managed by Vanguard, State Street, and BlackRock, and all three do extensive research for proxy voting decisions and have their own proxy voting guidelines that they publish. Also, those three funds hold over $2 trillion tracking the S&P 500 index and represent the vast majority of retail traders invested in the stock market. While index funds don’t do research to pick stocks, they utilize their research base for voting decisions.

Both proxy firms recommended shareholders vote against Musk’s pay package partly because it dilutes existing investors’ shares and gives Tesla’s highly compensated board too much flexibility when it comes to the goals Musk has to meet to get the full payout, which is about equal to the company’s total market cap.

In another series of posts, Wood added that ISS and Glass Lewis don’t see the potential in Tesla that ARK Invest does and seemingly suggested index funds should be stripped of their voting power. ARK Invest’s flagship ARK Innovation ETF’s largest holding is Tesla, which makes up about 12% of its $8 billion portfolio.

“I believe that history will decide that Glass Lewis and ISS have been menaces to innovation, enabling passive investors who care about ‘tracking errors’ to their indexes but do not care about much else,” Wood wrote in a post referring to how closely index funds track indexes such as the S&P 500.

Russell Rhoads, a clinical associate professor of financial management at Indiana University, said while investors in an active fund know its management may push for changes to a company if it is struggling, the same isn’t true for passive investors who put their money into index funds.

“In general, if I put money into a fund, that’s supposed to mirror the index, that is a passive investment,” he said. “I’m just investing in the market and not trying to influence anything what any other companies are doing business wise.”

Tesla, for its part, said in a Monday statement that the proxy firms aren’t considering the previous 2018 pay package approved by shareholders on two different occasions that allocated $56 billion to Musk over 10 years. Both ISS and Glass Lewis also recommended voters reject the 2018 pay package.

“Glass Lewis’s one-size-fits-all checklists undermine shareholders’ interests, including by opposing proposals designed to build long-term value at Tesla,” the statement read.

When reached for comment, representatives from Glass Lewis and ISS directed Fortune to their respective proxy papers on Tesla.

Prior to the proxy firms’ reports, the SOC Investment Group, which works with pension funds sponsored by major unions such as the International Brotherhood of Teamsters, as well as several parties with an interest in Tesla including state financial officers, signed a letter with the Securities and Exchange Commission urging shareholders to vote no on Musk’s pay package earlier this month. 

If Musk’s pay is approved and the three board members are reelected, “this year may be one of the last times that public shareholders have a meaningful voice in the Company and its leadership given the level of dilution that is likely to take place,” the letter argued.

Tejal Patel, the executive director of Tesla shareholder group SOC Investment Group, said despite the company claiming Musk needs more incentive to stay engaged with Tesla, Musk’s incentives should already align with the company whose shares represent the bulk of his $455 billion net worth. SOC has been vocally critical of Tesla and its corporate governance for multiple Musk pay packages on multiple grounds.

“We just don’t believe that these pay packages are going to really incentivize Mr. Musk to stay at Tesla, nor to be focused on Tesla over his other business endeavors,” Patel told Fortune.

Still, Wood said she was confident Musk’s pay package would pass, in part because of the support of retail investors, which hold about 40% of Tesla’s voting shares. 

“Although the proxy firm ISS has recommended against the package, retail investors are likely to dominate the vote once again. America!”

[This report has been updated to include a paragraph providing additional context on the extent of the major index funds’ research activities.]

Tesla (TSLA 7.21%) is one of the world’s largest manufacturers of electric vehicles (EVs), but rising competition is slowly chipping away at its market share. EV sales are still the main driver of Tesla’s financial results, but CEO Elon Musk is trying to future-proof the company by steering its resources into new products like autonomous vehicles and robotics.

Ark Investment Management, which was founded by seasoned tech investor Cathie Wood, predicts autonomous vehicles will transform Tesla’s economics. In fact, Ark thinks a whopping 86% of the company’s earnings will come from self-driving robotaxis by 2029, paving the way for a stock price of $2,600. That would be a 615% increase from where Tesla stock trades today.

How realistic is Ark’s forecast? Let’s dive in.

Tesla’s EV business is sputtering

To meet Ark’s bullish 2029 forecast, Tesla will have to transition from selling passenger EVs to selling self-driving robotaxis, and it will also have to build new services like an autonomous ride-hailing network.

Unfortunately, Tesla is currently operating from a position of weakness, which is forcing this shift earlier than the company perhaps would have liked. After all, government regulators haven’t approved Tesla’s full self-driving (FSD) software for unsupervised use anywhere in the U.S. yet, which is a huge barrier to the success of its upcoming Cybercab robotaxi.

Tesla delivered 1.79 million passenger EVs during 2024, which was down 1% from the prior year, marking the first annual decline since the company launched its flagship Model S in 2011. The situation is much worse in 2025, with deliveries shrinking by a whopping 13% in the first half of the year. This led to a 14% decline in Tesla’s revenue and a 31% collapse in its earnings per share (EPS) during the same period, which is alarming to say the least.

A rapid increase in competition is a key reason for Tesla’s woes. Low-cost EV producers like China-based BYD are making serious inroads into some of Tesla’s biggest markets. Tesla’s sales sank by 40% across Europe in July, despite EV registrations climbing by 33% overall. BYD, on the other hand, saw a whopping 225% increase in sales in the region.

Simply put, Tesla is quickly losing market share in the passenger EV space. The company is launching a low-cost EV of its own in order to compete, but production just started so it probably won’t be a factor until next year at the earliest.

86% of Tesla’s earnings could soon come from autonomous robotaxis

Elon Musk is making a big bet on autonomous ride-hailing. The Cybercab, which will enter mass production in 2026, will run entirely on Tesla’s FSD software, so it’s designed to operate without any human intervention. In theory, that means it can haul passengers and even small commercial loads at all hours of the day, creating a lucrative new revenue stream for the company.

Scaling this business will come with challenges. I mentioned FSD isn’t approved for unsupervised use in the U.S. just yet, but Tesla will also have to compete with established ride-hailing giants like Uber Technologies, which has already partnered with 20 other companies in the autonomous driving space. Around 180 million people already use Uber every single month, so it’s in a much better position to dominate the autonomous ride-hailing industry compared to Tesla, which has to build an entire network from scratch.

However, Ark thinks Tesla will eventually make it work. Its forecasts suggest the company will generate $1.2 trillion in annual revenue by 2029, with 63% ($756 billion) coming from its robotaxi platform alone. Ark says that could translate to $440 million in earnings before interest, tax, depreciation, and amortization (EBITDA), with 86% attributable to the robotaxi because of its high profit margins — human drivers are the largest cost in existing ride-hailing networks, but the robotaxi won’t need them.

Don’t rush to buy Tesla stock just yet

In my opinion, Ark’s predictions are too ambitious. Wall Street thinks Tesla will generate around $93 billion in revenue during 2025 (according to Yahoo! Finance), so that figure will have to grow by almost 1,200% over the next four years to meet Ark’s forecast of $1.2 trillion — driven by a brand-new robotaxi product that hasn’t even hit the road yet.

Tesla’s valuation is another issue. Its stock is trading at an eye-popping price-to-earnings (P/E) ratio of 209, making it almost seven times as expensive than the Nasdaq-100 technology index — which trades at a P/E ratio of 31.6. Remember, Tesla’s earnings are currently shrinking, which makes its premium valuation even harder to justify.

Therefore, I’m hesitant to buy into the idea that Tesla stock could surge by another 615% over the next four years to reach Ark’s price target of $2,600. It might be possible if the company’s robotaxi platform becomes as successful as Ark predicts, but I think that’s unlikely in such a short period of time. After all, Elon Musk has promised unsupervised self-driving cars for the last 10 years, and Tesla still hasn’t delivered.

Cathie Wood is one of Wall Street’s most closely followed investment managers. Wood founded Ark Investment Management in 2014 with a focus on disruptive innovation, and has endeared herself to investors with her transparent, social-media-friendly approach to portfolio management.

A longtime crypto bull, Wood recently started a position in Bitmine Immersion Technologies (BMNR -4.91%). Ark’s ETFs purchased 4.4 million shares on July 21. Bitmine chugged 2% higher the following day, but that’s a drop in the bucket compared to the stock’s 435% gain since it debuted on the public markets in June. Is now the time to follow Wood and get in on this stock.

All in on Ethereum

Bitmine’s core business is mining Bitcoin. The company claims that its immersion-cooled mining technology is more cost-effective and environmentally friendly than conventional Bitcoin mining systems. Bitmine also offers mining-as-a-service and Bitcoin treasury consulting.

For its fiscal 2024, which ended Aug. 31, 2024, Bitmine reported $3.3 million in revenue, a 413% year-over-year increase. The lion’s share of its revenue came from mining. While the company reported a net loss of $3.29 million, its net cash used in operating activities was a loss of $28,753 — a dramatic improvement over the $809,715 loss in 2023.

On June 5, Bitmine stock began trading on the New York Stock Exchange with little fanfare, closing at $7.75 per share. Shortly after, the company began buying Bitcoin, following in the footsteps of MicroStrategy (doing business as Strategy) and other companies that have added the cryptocurrency to their balance sheets.

Here’s where things take an interesting turn. On June 30, Bitmine said it was pivoting to Ethereum as its primary financial reserve. The company announced a $250 million private placement of common stock to bankroll its first Ethereum purchase, and named market strategist and outspoken crypto bull Tom Lee as chairman of the board. The share price skyrocketed 696% in one trading day.

The stock has been on a roller-coaster ride since then, peaking at $161 a share in early July before settling into a tighter trading range. As of the closing bell on July 24, Bitmine stock was trading at around $42 a share. Meanwhile, Ethereum is up nearly 139% over the past three months.

How it’s using Cathie Wood’s money

As of July 17, Bitmine Immersion Technologies held 300,657 Ethereum tokens — 60,000 of which were via in-the-money options — worth more than $1 billion. The company’s publicly stated goal is to acquire and stake 5% of the overall Ethereum supply.

Bitmine has said it pivoted to Ethereum because of its utility as a facilitator of smart contracts, stablecoin payments, and decentralized finance transactions. Stablecoins, in particular, are seeing mainstream adoption by consumers, merchants, and financial services providers, and Lee has called them “the ChatGPT of crypto.”

“Acquiring $1 billion of ETH is a clear signal of our conviction in Ethereum’s long-term value,” Bitmine CEO Jonathan Bates said in a press release.

Bitmine said it plans to use the net proceeds from Wood’s investment to purchase more Ethereum.

Is Bitmine a buy?

Wood isn’t the only high-profile investor to start a position in Bitmine. Earlier this month, tech mogul Peter Thiel disclosed a 9.1% stake in Bitmine through his venture capital funds.

While Bitmine’s core business is Bitcoin mining, stockpiling Ethereum has completely changed its value proposition for investors. You won’t find any pure-play Bitcoin miners in Wood’s flagship Ark Innovation ETF. That’s because Wood considers Bitmine a “digital asset treasury” company.

“These companies could be the next-gen asset managers in the on-chain capital markets age,” Wood asserted in a post on X.

Bitmine reported $1.2 million in revenue for its first quarter of fiscal 2025, which ended on Nov. 30, 2024. That’s a 135% year-over-year increase. The company reported a net loss attributable to common shareholders of $3.9 million, compared to $930,000 in the year-ago quarter. The increase was mainly due to an accounting adjustment related to preferred stock, according to the company.

The price-to-sales (P/S) ratio can be a useful metric when comparing the valuations of companies that aren’t profitable. With a P/S ratio of 16 on a trailing-12-month basis, Bitmine is trading at a premium compared to other crypto miners.

BMNR PS Ratio data by YCharts

While Bitmine’s top line is growing at an impressive clip, it’s clear to me that investors are piling in because of its massive stockpile of Ethereum, not its underlying fundamentals. Ultimately, this is an unprofitable company that’s selling shares of common stock to buy Ethereum.

With $1 billion in Ethereum on its balance sheet, I would expect Bitmine’s fortunes to be closely tied to the price action in Ethereum — more so than Bitmine’s fundamentals. And that raises the question: As an investor, why not just buy Ethereum directly?