Wood's Strategic Move: SpaceX Replaces Tesla in ARK Portfolio on the Day of Historic IPO
Cathie Wood, known for her unwavering faith in Tesla, has made a landmark move. On the day of SpaceX's long-awaited stock market debut, her ARK fund executed a massive purchase of SPCX shares worth approximately $444 million, while simultaneously reducing its stake in Tesla. This decision is not merely a rebalancing but a clear signal of shifting priorities within Elon Musk's empire.
The trades were conducted on June 12, the day of SpaceX's IPO. The company's shares surged 19% on the first day, and Musk's net worth exceeded $1 trillion for the first time. ARK acquired 3.29 million shares of SpaceX at the offering price of $135. By the close of trading, this stake was already valued at $529.7 million. On the same day, the fund cut positions not only in Tesla but also in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
Why is Wood betting on SpaceX?
Tesla shares have long been an anchor for ARK, and Wood has publicly supported the company even during its toughest times. However, the situation has now changed. Chinese competitors have nearly caught up with Tesla, its profitability is declining, and Musk's political activity is alienating some consumers. With SpaceX, the picture is the opposite. Its only profitable segment—satellite internet Starlink—is experiencing explosive growth. Wood first invested in SpaceX in late 2023, and now 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.
The purchase of $529.7 million worth of shares is a significant move by ARK's standards. At the same time, SpaceX has recorded a cumulative loss of $41.3 billion as of March 31. Retail investors have been allocated 30% of the offering—three to six times higher than the usual level, indicating strong demand.
Context of ARK's returns
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 Over the past 12 months, investors have withdrawn approximately $294 million net from it. According to Morningstar, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' funds. In the IPO sector, Cathie Wood follows a single strategy: enter promising companies as early as possible. Thus, ARK bought Coinbase shares shortly after its listing in 2021 and recently bet on CoreWeave. SpaceX has become its largest investment.
My analysis: Wood's decision is a classic "knight's move" for a fund seeking a new growth story after Tesla's stagnation. SpaceX is not just a space company but a monopolist in the low-orbit internet segment with potential that the market is only beginning to assess. However, the bet is on a company with colossal accumulated losses. Whether SpaceX will turn a profit and allow for stable earnings, or become another costly mistake for ARK, only time will tell. But one thing is clear: Wood is betting on a future that, in her view, has already arrived.