Kathy Wood shifts her eggs into the SpaceX basket: IPO day marks a pivot from Tesla
June 12 became a landmark day for the ARK Invest portfolio. On the day of the long-awaited SpaceX IPO, Cathie Wood made a strategic maneuver that analysts have already dubbed "the Musk era reshuffle." The fund purchased shares of the space company worth approximately $444 million, while simultaneously reducing its stake in Tesla. Both companies are owned by Elon Musk, but Wood's priorities have now shifted in favor of space.
The details of the deal are impressive. ARK bought 3.29 million shares of SpaceX at an offering price of $135 per share. By the close of trading, this stake was worth $529.7 million—a 19% increase in a single day. This allowed Musk's wealth to exceed $1 trillion for the first time. On the same day, Wood cut positions not only in Tesla but also in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
Why Wood is leaving Tesla but entering SpaceX
Tesla shares have long been ARK's flagship asset. However, the situation is now changing: Chinese competitors have nearly caught up with the electric vehicle manufacturer, the company's profitability is declining, and Musk's political activity is alienating some consumers. Wood, known for betting on Tesla even during tough times, now sees more potential in SpaceX.
Starlink—SpaceX's only profitable division—is experiencing explosive growth. The company has become the largest position in ARK's venture portfolio (about $1 billion). After the IPO, the fund can increase its investments on the public market. Notably, 30% of the offering has been allocated to retail investors—3 to 6 times higher than the usual level.
Context of ARK's performance
Despite the high-profile deals, ARK's performance leaves much to be desired. Since the beginning of the year, the ARK Innovation ETF has grown only 1.61%, while the S&P 500 has gained about 9%. Over the past 12 months, investors have withdrawn approximately $294 million net from the fund. According to Morningstar estimates, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' funds.
Wood operates on a single playbook: enter promising companies as early as possible. This was the case with Coinbase in 2021 and recently with CoreWeave. Now SpaceX has become the largest investment. The question is whether the company will turn a profit and allow for steady earnings, or whether it will become another costly mistake for ARK.
My analysis: This move by Cathie Wood is not just diversification but a paradigm shift. Tesla has ceased to be a "stock of the future" in her eyes, giving way to SpaceX, where growth multipliers are not yet limited by earthly markets. However, given SpaceX's current unprofitability ($41.3 billion in cumulative losses as of March 31), betting on it is a long-term game that could either save ARK's reputation or bury it for good.