Wood's Strategic Pivot: SpaceX Takes Priority Over Tesla on the Day of Historic IPO
June 12 became a landmark day not only for the space industry but also for Cathie Wood's investment strategy. On the day of SpaceX's long-awaited stock market debut, her ARK fund executed a massive portfolio rebalancing, making an unequivocal bet on Elon Musk's brainchild at the expense of his automotive giant.
A Billion-Dollar Shift: Details of the Deal
On the IPO day, ARK purchased approximately 3.29 million shares of SpaceX at the offering price of $135. By the close of the trading session, amid a 19% surge in the stock, this stake was valued at $529.7 million. Notably, at the same time, the fund significantly reduced its positions in Tesla, as well as in Advanced Micro Devices, Rocket Lab, Roku, and Baidu. Thus, Wood is clearly signaling to the market a shift in priorities within the "Musk empire."
Why is Tesla Giving Way to Starlink?
For a long time, Tesla shares were the cornerstone of ARK, and Wood publicly defended the company during its toughest times. Now the situation has changed. Chinese competitors like BYD have practically caught up with Tesla in sales volumes, business margins are declining, and Elon Musk's political activism is alienating part of the consumer base. At the same time, Starlink — currently the only profitable division of SpaceX — is showing explosive growth in its subscriber base and revenue. ARK's venture portfolio already includes about $1 billion in SpaceX shares, and now the fund can increase this stake on the public market.
Context of Returns and Risks
It is worth noting that Wood's decision looks particularly bold against the backdrop of the less-than-impressive performance of her flagship ARK Innovation ETF. Since the start of the year, the fund has gained only 1.61%, while the S&P 500 has risen by nearly 9%. Moreover, according to analysts' estimates, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' funds. Wood's strategy has always been to enter promising companies as early as possible — as was the case with Coinbase in 2021 and recently with CoreWeave. However, SpaceX is a bet of an entirely different magnitude.
Expert Opinion: Buying $529 million worth of SpaceX on its IPO day is not just a trade; it is a bid for leadership in a new technological era. However, given SpaceX's cumulative loss of $41.3 billion, this is an extremely volatile and long-term bet. The question is not whether SpaceX will grow, but whether ARK investors will have the patience and resources to endure potential years of losses until Starlink reaches full capacity. This is the classic Wood dilemma: a brilliant vision of the future versus the harsh reality of current quarterly reports.