Wood's Strategic Pivot: $444 Million in SpaceX and Reduction of Tesla Stake on IPO Day
June 12 became a landmark day not only for Elon Musk but also for Cathie Wood's investment strategy. On the day of SpaceX's public market debut, her ARK fund executed a massive portfolio rebalancing, purchasing approximately $444 million worth of SPCX shares while simultaneously reducing its position in Tesla. This decision clearly demonstrates a shift in the manager's priorities: both assets belong to the same founder, but growth potential is now seen in the space sector rather than the automotive sector.
On the IPO day, SpaceX shares surged 19%, surpassing Musk's net worth of $1 trillion for the first time in history. ARK acquired 3.29 million shares at the offering price of $135, and by the close of trading, this stake was already worth $529.7 million. Concurrently, the fund trimmed its holdings in Tesla, Advanced Micro Devices, Rocket Lab, Roku, and Baidu. This is not a spontaneous decision but a calculated move: Wood first invested in SpaceX in late 2023, and now this company has become the largest position in ARK's venture portfolio, valued at approximately $1 billion.
Why is Tesla no longer the favorite?
For a long time, Tesla shares remained the anchor of ARK, and Wood publicly supported the company even during its toughest times. However, the picture has now changed: Chinese competitors have nearly caught up with Tesla in technology, its profitability is declining, and Musk's political activities are alienating part of the consumer base. Meanwhile, SpaceX's only profitable division—Starlink satellite internet—is experiencing explosive growth. Retail investors were allocated 30% of the offering, three to six times the usual level, which also indicates high demand.
Context of ARK's returns
Since the start of the year, the ARK Innovation ETF has risen only 1.61%, while the S&P 500 has gained about 9%. Over the past 12 months, investors have withdrawn approximately $294 million net from the fund. According to Morningstar estimates, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' funds. In the IPO sector, Cathie Wood follows a single playbook: enter promising companies as early as possible. This was the case with Coinbase in 2021 and recently with CoreWeave. SpaceX has now become the largest investment.
My analysis: The purchase of SpaceX for $529.7 million is a significant move even by ARK's standards. However, given the company's cumulative loss of $41.3 billion as of March 31, Wood's bet is a high-risk, long-term play. If Starlink continues to monetize, SpaceX could become a "gold mine." If not, it will be another costly mistake in ARK's portfolio. Time will tell whether the space giant lives up to expectations or repeats the fate of the fund's other "innovative" failures.