Cathy Wood makes a decisive move: SpaceX becomes a priority over Tesla on the day of the historic IPO
June 12 became a landmark day not only for SpaceX but also for ARK Invest's investment strategy. On the day of Elon Musk's long-awaited stock market debut for his space company, Cathie Wood executed a massive capital reallocation that clearly signaled a shift in her priorities. The fund purchased approximately $444 million worth of SpaceX (SPCX) shares, while simultaneously reducing its stakes in Tesla, as well as in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
This decision was made at a time when SpaceX shares surged 19% on the very first day of trading. As a result, the package of 3.29 million shares, purchased at the offering price of $135, was already worth $529.7 million by the close of the session. Notably, Elon Musk's net worth exceeded the $1 trillion mark for the first time on this day, underscoring the scale of the event.
Why is Tesla taking a back seat?
For a long time, Tesla shares were the cornerstone of ARK's portfolio, and Wood publicly defended the company during its toughest times. However, the situation has now changed. Chinese competitors like BYD have nearly caught up with Tesla in sales volumes, the American giant's profitability is declining, and Musk's political activism, according to many analysts, is alienating part of its loyal audience. Against this backdrop, SpaceX, on the other hand, is showing explosive growth thanks to its only profitable segment — the Starlink satellite internet service.
It is worth noting that Wood first invested in SpaceX back in late 2023, and since then, the company has become the largest position in ARK's venture portfolio (about $1 billion). Now, after the public listing, the fund can increase its stake on the public market. The $529.7 million purchase is a significant move even by ARK's standards, especially considering that SpaceX's cumulative loss over its entire history stands at $41.3 billion as of March 31. Retail investors have been allocated 30% of the offering, which is 3-6 times higher than the usual level.
Context of ARK's returns
Since the beginning of the year, ARK's flagship ETF, ARK Innovation, 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 Over the past 12 months, investors have withdrawn approximately $294 million from the fund. According to Morningstar estimates, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' funds. In this situation, the bet on SpaceX looks like an attempt to reverse the negative trend.
Cathie Wood is following a proven strategy: entering promising companies as early as possible. This was the case with Coinbase after its listing in 2021 and recently with CoreWeave. Now, SpaceX has become her largest investment. The only question is whether the company can achieve stable profitability and live up to expectations, or whether this move will become another costly mistake for the fund. Time will tell, but the signal to the market is clear: the future, according to Wood, is now not on Earth, but in space.
Expert opinion: The capital shift from Tesla to SpaceX is not just diversification, but a fundamental change in thesis. Wood is betting on SpaceX's monopoly position in the space industry, where competition is currently much lower than in the electric vehicle market. However, the high valuation and the company's historical unprofitability make this bet one of the riskiest in Cathie Wood's career.