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Cathie Wood and ARK Invest expect the digital advertising market to more than double from its current size to over $400 billion over the next four years.

The top innovation-focused investment firm released a recent note estimating that the digital advertising market can grow from around $180 billion today to around $410 billion by 2026.

As brick-and-mortar footprints shrink in the United States, ARK argued that the push for e-commerce will mean an inherent shift in demand to digital. The company asserted: “By 2026, in our base case, the retail rental market will contract by 2.7% at a compound annual rate to approximately $270 billion. In our bullish case estimate, the decline is 3.2% to $264 billion. »

According to ARK, the US digital advertising market reached nearly $180 billion in 2021, representing 63% of the total advertising market. Additionally, ARK estimates that cost considerations may contribute to a significant increase in this percentage over the next five years.

ARK Invest explained, “The annual cost of renting a brick-and-mortar retail business is over 20 times more expensive than “renting” a storefront on Shopify, as shown below. If we were to include other upfront costs and ongoing capital expenditures, the relative savings of online stores would increase accordingly.” See table below including Shopify (NYSE: SHOP):

Wood and his team have three actively managed ETFs that have weightings in SHOP, led by ARK Fintech Innovation ETF (NYSEARCA:ARKF), ARK Next Generation Internet ETF (NYSEARCA:ARKW), and the company’s flagship product, ARK Innovation ETF (NYSEARCA:ARKK).

ARKF has a 10.19% weighting in the company, making the stock the second-largest ETF position. ARKW and ARKK, on ​​the other hand, have weightings of 4.83% and 3.22% in SHOP, which equates to ARKW’s eighth-largest position and ARKK’s thirteenth-largest position.

In related ARK news, the popular fund manager said in her latest monthly webinar, “We think we could be in a global recession.”