Kathy Wood shifts capital from Tesla to SpaceX: shares of the space giant soar 19% on debut day
Renowned ARK Invest fund manager Cathie Wood made a significant move on the day of SpaceX's long-awaited IPO. While shares of Elon Musk's space company surged 19% on the first day of trading, Wood simultaneously reduced her position in Tesla, signaling a shift in priorities within her investment strategy.
Deal Details: $444 Million on SpaceX and a Reduction in Tesla
On June 12, the day of the initial public offering, ARK Invest purchased 3.29 million shares of SpaceX at the offering price of $135. By the close of the trading session, this stake was valued at $529.7 million. On the same day, the fund significantly cut its holdings in Tesla, as well as in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
This decision appears particularly notable given the history: Tesla shares have long been the "core" of the ARK portfolio, and Wood publicly defended the company even during its most challenging times. However, the context has now changed. Chinese competitors have nearly caught up with Tesla, its profitability is declining, and Musk's political activities are alienating some buyers.
The picture is the opposite with SpaceX. The company's only profitable division—satellite internet service Starlink—is experiencing explosive growth. Wood first invested in SpaceX in late 2023, and it is now the largest position in ARK's venture portfolio (approximately $1 billion). Following the IPO, the fund can increase its investments on the public market.
Context of ARK's Returns: A Bet on the Future or Another Mistake?
Since the beginning of the year, the ARK Innovation ETF has grown by only 1.61%, 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 Over the past 12 months, investors have withdrawn approximately $294 million in net funds from the fund.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.
In the IPO sector, Cathie Wood follows a single playbook: enter promising companies as early as possible. This is how ARK bought shares of Coinbase shortly after its listing in 2021 and recently bet on CoreWeave. SpaceX has now become its largest investment.
Whether SpaceX will turn a profit and allow for consistent earnings, or become another costly mistake for ARK, only time will tell.
My analysis: The flow of capital from Tesla to SpaceX is not just diversification, but a deliberate choice in favor of a "hardware" business with a monopoly position (Starlink) against an overheated electric vehicle market. However, it is worth remembering that SpaceX has a cumulative loss of $41.3 billion, and its profitability remains in question. 30% of the offering was allocated to retail investors—three to six times higher than the usual level, which adds speculative risk.