Cathy Wood bets on SpaceX: ARK portfolio reshuffle on the day of historic IPO
June 12, 2024, marked a significant date for the market: the long-awaited SpaceX IPO took place. On the same day, Cathie Wood, who manages ARK Invest funds, made perhaps the most telling rotation in recent years. She purchased shares of Elon Musk's space company for approximately $444 million, while simultaneously reducing her position in Tesla. This decision signals a shift in priorities within the fund's strategy.
On the day of SpaceX's stock market listing, its shares surged 19% compared to the offering price. ARK acquired 3.29 million shares at $135 each, and by market close, this stake was already worth $529.7 million. Concurrently, Wood reduced holdings in Tesla, Advanced Micro Devices, Rocket Lab, Roku, and Baidu. Notably, 30% of the offering was allocated to retail investors—3 to 6 times higher than usual—indicating a high proportion of speculative capital.
Why is Tesla no longer a favorite?
Tesla shares have long been a cornerstone of the ARK portfolio. However, the situation has now changed. Chinese competitors, such as BYD, have nearly caught up with Tesla in terms of sales volume and technology. The company's profitability is declining amid price wars, and Elon Musk's political activity is clearly alienating part of the traditional audience. Under these circumstances, a bet on SpaceX appears more justified.
SpaceX's only profitable division—the Starlink satellite internet service—is experiencing explosive growth. ARK's venture portfolio already values its stake in SpaceX at approximately $1 billion, and the fund can now increase its investments on the public market. This is a classic move by Cathie Wood: entering promising companies at the earliest stage, as she did with Coinbase in 2021 and CoreWeave in 2024.
ARK's return context: risks and prospects
It is important to understand that Wood's decision comes against the backdrop of less-than-optimal performance for her flagship fund. The ARK Innovation ETF has risen only 1.61% since the start of the year, while the S&P 500 has gained about 9%. Over the past 12 months, investors have withdrawn approximately $294 million in net funds from the fund. According to Morningstar estimates, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' capital.
Expert opinion from Cryptalist: The reallocation of capital from Tesla to SpaceX is not just diversification, but an acknowledgment that the era of electric vehicles as Musk's sole growth driver is coming to an end. SpaceX, despite a cumulative loss of $41.3 billion as of March 31, has enormous monetization potential through Starlink and government contracts. However, for ARK, this is a double-edged sword: either SpaceX will become a new "golden goose," or yet another costly mistake in a series of unsuccessful bets. Time will tell whether Wood can once again outperform the market, or if investors will continue to lose capital.