Kathy Wood makes a major bet on SpaceX: reallocating capital toward space at the expense of Tesla
On the day of SpaceX's long-awaited initial public offering on the stock market, Cathie Wood, CEO of ARK Invest, made a massive strategic move. Her flagship fund purchased SPCX shares worth approximately $444 million, while simultaneously reducing its position in Tesla. Both companies are led by Elon Musk, but the investment guru's priorities have shifted quite tellingly.
The trades were executed on June 12, the day of SpaceX's debut. The space company's stock price surged 19% on its first trading day, and Musk's personal wealth exceeded $1 trillion for the first time. ARK acquired 3.29 million SpaceX shares at the offering price of $135 each. By the close of the trading session, this stake was already worth $529.7 million. On the same day, the fund reduced its holdings in Tesla, as well as in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
Why Wood is Swapping Tesla for SpaceX
Tesla shares have long been a cornerstone of ARK's portfolio, and Wood publicly supported the company during its toughest times. However, the situation has now changed dramatically. Chinese competitors like BYD have nearly caught up with Tesla in production volumes, business margins are declining, and Musk's political activity is alienating some consumers.
In contrast, SpaceX, which remained unprofitable for a long time, is showing impressive growth in its only profitable segment—the Starlink satellite internet business. This business is scaling exponentially. Wood first invested in SpaceX back in late 2023, and now this company has become the largest position in ARK's venture portfolio, valued at approximately $1 billion. With the public market listing, the fund can increase its investments without the restrictions typical of private placements.
The purchase of a $529.7 million stake is a significant move even by ARK's standards. It is worth noting that 30% of the offering was allocated to retail investors, which is three to six times higher than the usual level. Meanwhile, SpaceX's cumulative loss as of March 31 stood at $41.3 billion, a gigantic figure even for the space industry.
Context of ARK's Performance
Since the beginning 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 Over the past 12 months, investors have withdrawn approximately $294 million in net funds from the fund.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 the IPO space, Cathie Wood follows a single playbook: enter promising companies as early as possible. This is how ARK bought Coinbase shares shortly after its listing in 2021 and recently bet on CoreWeave. SpaceX has now become its largest investment.
My view as an analyst: The bet on SpaceX is not just diversification but a fundamental shift in investment paradigm. Wood is betting that Starlink will become the "new internet," capable of generating stable cash flow, while Tesla faces growing competition and a maturing electric vehicle market. However, given SpaceX's massive accumulated losses, the question of whether this bet will be another costly mistake or a stroke of genius remains open. Time will tell if the space giant can justify such an aggressive valuation.