Kathy Wood reshuffles her portfolio: SpaceX becomes ARK's favorite, Tesla falls out of favor
A landmark event has occurred in the market, demonstrating a shift in priorities for one of the most renowned institutional investors. On the day of SpaceX's long-awaited initial public offering (IPO), Cathie Wood's ARK fund executed a massive rebalancing, increasing its stake in Elon Musk's space giant by reducing its position in his other venture, Tesla. This decision is not merely a tactical move but a clear signal of where Wood believes the primary growth points lie in the coming years.
The trades were executed on June 12. ARK purchased 3.29 million shares of SpaceX at the IPO price of $135 per share, investing approximately $444 million. By the close of the trading session, the value of this stake had soared to $529.7 million, thanks to a 19% surge in the stock on its first day. On the same day, the fund reduced its holdings in Tesla, as well as in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
Why is Tesla losing ground in the ARK portfolio?
For a long time, Tesla shares were a cornerstone of Cathie Wood's strategy. She publicly defended the company during its toughest times. However, the context has now changed dramatically. Chinese competitors, such as BYD, have nearly caught up with Tesla in terms of sales volume and technology. Business margins are declining amid price wars. Additionally, Elon Musk's political activities appear to be alienating part of the consumer base, creating additional reputational risks for the brand.
Against this backdrop, SpaceX looks like a much more attractive asset. The company's only profitable division, the Starlink satellite internet service, is experiencing explosive growth, and it is precisely this that Wood seems to be betting on. Notably, ARK first invested in SpaceX back in late 2023, and now, after the IPO, this position has become the largest in the fund's venture portfolio, valued at approximately $1 billion.
Context of returns and ARK's strategy
It is worth noting that Wood's decision to shift into SpaceX comes amid less-than-impressive performance by her flagship fund, the ARK Innovation ETF. Since the start of the year, it has gained only 1.61%, while the S&P 500 index has risen by about 9%. Over the past 12 months, investors have withdrawn approximately $294 million in net capital from the fund. According to Morningstar estimates, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' funds, placing particular pressure on Wood's new decisions.
Cathie Wood's strategy in the IPO sector has always been aggressive: entering promising companies as early as possible. This was the case with Coinbase immediately after its listing in 2021, and more recently with CoreWeave. Now, SpaceX has become the largest bet. The question is whether Musk's space business, which had accumulated a total loss of $41.3 billion as of March 31, can achieve stable profitability and justify the high expectations.
Expert opinion: The flow of capital from Tesla to SpaceX is not just diversification but an acknowledgment that the "old" Tesla growth story, based on mass production of electric vehicles, is nearing saturation. Space expansion and Starlink's monopoly appear to be a more long-term and less competitive market. However, for retail investors, who were allocated only 30% of the offering, entering SpaceX at current levels is a high-volatility game. Whether SpaceX will become a "gold mine" for ARK or another costly mistake remains to be seen, but the initial signals look promising.