In investing, Cathie Wood’s every move draws intense scrutiny. This time, Ark Invest has ignited debate with an unusual pattern: seven consecutive trading days of buying into small-cap gene-diagnostic company GeneDx Holdings Corp (WGS). What makes this particularly intriguing is the stock’s valuation paradox—DCF models suggest it’s undervalued by 75%, while its price-to-sales ratio screams overvaluation.
Is Wood bottom-fishing, or is she catching a falling knife?
According to Ark Invest’s daily trading disclosures, from March 3 to 11, two of Wood’s flagship ETFs—Ark Innovation ETF (ARKK) and Ark Genomic Innovation ETF (ARKG)—bought GeneDx shares every single session.
The seven-day buying spree unfolded as follows (ARKK / ARKG):
In total, ARKK accumulated 79,059 shares and ARKG added 62,328 shares. As of March 11, ARKK held 782,544 shares—1.02% of its portfolio, its 34th-largest holding. ARKG held 321,142 shares—2.48% of assets, its 16th-largest holding.
Despite its modest $2.5 billion market cap, GeneDx’s fundamentals tell a compelling story.
On Feb. 23, the company reported Q4 results that topped both revenue and EPS estimates. That marked the 10th consecutive quarter of EPS beats and the 12th straight quarter of revenue beats. Q4 revenue reached $121 million, up 27% year-over-year. Full-year revenue hit $427.5 million, a 41% increase, with exome and genome testing volume climbing 30.5% to 97,000 tests.
For 2026, GeneDx projects revenue between $540 million and $555 million. CEO Katherine Stueland struck an confident tone: “The business has never been in a better position for continued growth.” Expansion into prenatal diagnostics and broader Medicaid coverage for genetic sequencing across multiple states provide clear growth catalysts.
The real head-scratcher for investors is the stark contradiction between two widely used valuation metrics.
The DCF case: A deep-value opportunity. Using a two-stage free cash flow model based on trailing 12-month free cash flow of roughly $15 million, combined with analyst estimates and extrapolations, projected free cash flow reaches $325.6 million by 2030. Discounting those future cash flows yields an intrinsic value of approximately $379.21 per share. Against the current price around $94.51, that implies the stock is undervalued by 75.1%.
The P/S case: Anything but cheap. GeneDx trades at 6.47x sales—far above the healthcare industry average of 1.31x and the peer group average of 1.91x. Even against Simply Wall St’s “fair P/S” estimate of 5.05x—which adjusts for the company’s specific growth profile, margins, and risk factors—the stock looks expensive. By revenue multiples, this is no bargain.
So which is it? Trust the long-term cash flow math, or heed the near-term valuation signal?
Despite Wood’s persistent buying, GeneDx shares have tumbled 37.8% year-to-date to around $81.40, more than halved from their 52-week high of $170.87. The market appears to be discounting something—perhaps that robust growth has already been priced in, or that DCF assumptions face real-world headwinds.
Competition in gene diagnostics is intensifying. Payer coverage expansion takes time. And sustaining that streak of earnings beats? No guarantee.
Cathie Wood’s buying spree has put GeneDx in the spotlight. But “cheap or expensive” isn’t a simple question. The DCF-versus-P/S clash is ultimately a tug-of-war between long-term cash flow logic and short-term valuation discipline. Do you bet on time proving out the deep value thesis, or do you respect what the high multiple implies about market expectations?
Before copying Wood’s homework, investors might want to decide which camp they’re in.
