Kathy Wood is moving eggs from the Tesla basket to the SpaceX basket: ARK's strategic pivot on the day of the historic IPO
The market witnessed a landmark event: on the day of SpaceX's long-awaited IPO, Cathie Wood, CEO of ARK Invest, made a decisive strategic maneuver, reallocating capital in favor of the space giant by reducing her position in Tesla. This action is not just trading, but a clear signal of shifting priorities in the portfolio of one of the world's most famous innovation funds.
On June 12, the day of SpaceX's stock market debut, ARK funds purchased approximately 3.29 million shares of SPCX at an offering price of $135. By the close of trading, this stake was valued at $529.7 million, indicating an immediate 19% increase. On the same day, Wood trimmed holdings in Tesla, as well as in Advanced Micro Devices, Rocket Lab, Roku, and Baidu. The total value of the acquired SpaceX securities amounted to about $444 million.
Why is Tesla giving way to SpaceX?
Tesla shares have long been a cornerstone of ARK, and Wood publicly defended the company during its toughest times. However, the picture is now changing. Chinese competitors such as BYD have nearly caught up with Tesla in sales volumes, profitability is declining, and Elon Musk's political activism is alienating part of the consumer base. At the same time, SpaceX, thanks to the rapid growth of its Starlink satellite internet service, is demonstrating explosive potential. Starlink is already the company's only profitable division, and its scaling is in full swing.
ARK's return context: a bet on the future or another risk?
Since the beginning of the year, the flagship 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 Over the past 12 months, investors have withdrawn approximately $294 million in net funds from the fund.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. Against this backdrop, entering SpaceX at an early stage of its public offering looks like an attempt to reverse the trend and find a new growth driver.
Wood is acting according to a proven scenario: entering promising companies as early as possible. This was the case with Coinbase in 2021 and recently with CoreWeave. Now SpaceX has become the largest position in ARK's venture portfolio (about $1 billion). Allocating 30% of the offering to retail investors is three to six times higher than the usual level, underscoring the unique demand.
My analysis: This move is a classic "pivot" from Wood. She acknowledges that Tesla may have reached the peak of its market dominance in the eyes of institutional investors and is seeking a new "gold mine" in the space economy. However, SpaceX, despite the hype, had a cumulative loss of $41.3 billion as of March 31. Whether it will become ARK's next lifeline or another costly mistake remains to be seen. But one thing is certain: the market is closely watching every move of the "Queen of Innovation."