Kathy Wood's Strategic Pivot: $530 Million Purchase of SpaceX and Reduction of Stake in Tesla
Cathie Wood, CEO of ARK Invest, made a landmark move on the day of SpaceX's stock market debut. On June 12, her fund purchased approximately 3.29 million shares of Elon Musk's space company at an offering price of $135, spending about $444 million. By the close of the trading session, this stake was already worth $529.7 million — a 19% increase in a single day.
Simultaneously, ARK reduced its stake in Tesla, as well as shares of Advanced Micro Devices, Rocket Lab, Roku, and Baidu. The portfolio rebalancing occurred as Elon Musk's net worth surpassed $1 trillion for the first time. Clearly, Wood is betting on the future of Starlink and space technologies rather than the traditional automotive industry, even if it involves the leader in the electric vehicle market.
Why Tesla is Making Way for SpaceX
Tesla shares have long been a "blue chip" for ARK, and Wood publicly defended the company during its toughest times. However, the situation has now changed dramatically. Chinese competitors, such as BYD, have nearly caught up with Tesla in sales volumes and technology. Business profitability is declining, and Elon Musk's political activity is alienating some consumers. Under these conditions, Wood, as an experienced analyst, sees greater growth potential in SpaceX.
SpaceX, on the other hand, is showing explosive growth in its only profitable segment — the Starlink satellite internet service. The company first attracted ARK investments in late 2023, and this position has now become the largest in the fund's venture portfolio (about $1 billion). After the IPO, the fund can increase its investments on the public market, providing access to liquidity.
Context of ARK's Returns
Since the start of the year, the flagship ARK Innovation ETF has gained only 1.61%, while the S&P 500 index has risen nearly 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 Over the past 12 months, investors have withdrawn approximately $294 million in net funds from the fund.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. Under these conditions, Cathie Wood's decision to make a large bet on SpaceX looks like a desperate attempt to reverse the negative trend.
In the IPO sector, Wood follows a single scenario: 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 the largest investment. The question remains: will SpaceX turn a profit and allow for stable earnings, or will it become another costly mistake for ARK? Time will tell.
Expert opinion: Reducing the stake in Tesla in favor of SpaceX is not just diversification, but a clear signal to the market. Wood is betting on next-generation infrastructure projects that, in her view, will yield higher returns than the traditional automotive industry. However, the high volatility and unprofitability of SpaceX (cumulative loss of $41.3 billion as of March 31) make this move extremely risky. Investors should closely monitor Starlink's financial reports — it will be the key driver of growth or decline for this position.