Cathy Wood is outplaying the market: Is SpaceX instead of Tesla a brilliant move or a risky bet?
On the day of SpaceX's long-awaited stock market debut, legendary investor Cathie Wood made a decisive move, reshuffling the portfolio of her flagship ARK fund. On June 12, the day of the IPO, the fund purchased approximately $444 million worth of SpaceX shares while simultaneously reducing its position in Tesla. This is not just a rebalancing—it is a clear signal of shifting priorities in the era of new tech giants.
The deal was executed at the offering price of $135 per share. By the close of trading, the package of 3.29 million shares was valued at $529.7 million, highlighting a 19% gain on the first day. Notably, on the same day, the fund also trimmed stakes in Advanced Micro Devices, Rocket Lab, Roku, and Baidu, consolidating capital around its main bet.
Why is Wood swapping Tesla for SpaceX?
Tesla shares have long been a cornerstone of ARK, and Wood publicly defended the company during its toughest times. However, the situation has now changed dramatically. Chinese competitors like BYD have nearly caught up with Tesla in sales volume, business margins are declining, and Elon Musk's political activities are alienating part of the consumer base. Against this backdrop, SpaceX looks like an asset with a completely different dynamic.
SpaceX's only profitable division—Starlink satellite internet—is experiencing explosive growth. Wood first invested in SpaceX back in late 2023, and the company has now become the largest position in ARK's venture portfolio, valued at approximately $1 billion. With its public market debut, the fund gains the ability to increase investments without the restrictions typical of private rounds.
ARK's return context
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 Over the past 12 months, investors have withdrawn approximately $294 million in net funds from the fund. According to Morningstar estimates, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' capital. In this situation, the bet on SpaceX is not just an investment but an attempt to reverse the negative trend.
Wood's strategy remains unchanged: enter promising companies as early as possible. This was the case with Coinbase in 2021 and more recently with CoreWeave. Now SpaceX has become the largest holding. Whether the company will lead the fund to profitability and allow for stable earnings, or become another costly mistake, only time will tell.
My opinion: The capital shift from Tesla to SpaceX is a logical step, given the saturation of the electric vehicle market and SpaceX's unique position in the space industry. However, considering SpaceX's cumulative loss of $41.3 billion as of March 31, Wood's bet remains extremely high-risk. For retail investors, 30% of the offering has been allocated—three to six times the usual level, indicating high demand but also potential volatility. Keep an eye on the dynamics.