Cathy Wood makes a move: SpaceX vs Tesla on the day of the historic IPO
On the day of SpaceX's long-awaited stock market debut, Cathie Wood made a landmark maneuver, reshuffling the ARK Invest portfolio. The fund purchased approximately $444 million worth of SpaceX (SPCX) shares while simultaneously reducing its stake in Tesla. Both companies are owned by Elon Musk, but the priority in Wood's strategy has shifted dramatically.
Deal Details: $529.7 Million in 12 Hours
The transactions took place on June 12 — the day of SpaceX's IPO. The company's securities surged 19%, and Musk's net worth exceeded $1 trillion for the first time. ARK acquired 3.29 million SpaceX shares at the offering price of $135, and by the close of trading, the stake was already worth $529.7 million. On the same day, the fund cut its positions in Tesla, as well as in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
Why Wood is Reducing Her Tesla Stake
Tesla shares have long been ARK's main asset, and Wood publicly supported the company even during tough times. Now the situation is different: Chinese competitors have nearly caught up with Tesla, its profitability is declining, and Musk's political activity is alienating some buyers. The picture is the opposite with SpaceX. Its only profitable segment — the Starlink satellite internet service — is growing rapidly. Wood first invested in SpaceX in late 2023, and now this company is the largest position in ARK's venture portfolio (about $1 billion). After the IPO, the fund can increase its investments on the public market.
ARK's Performance Context
Since the beginning of the year, the 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 Over the past 12 months, investors have withdrawn approximately $294 million net from it. 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 scenario: enter promising companies as early as possible. Thus, ARK bought Coinbase shares shortly after its listing in 2021 and recently bet on CoreWeave. SpaceX has become the largest investment.
My professional take: Wood is clearly betting that SpaceX, thanks to Starlink and government contracts, will be able to generate a more stable cash flow than Tesla in a highly competitive environment. However, $529.7 million is a serious risk for a fund that is already showing weak returns. Whether SpaceX will turn a profit and allow for consistent earnings, or become another costly mistake for ARK, only time will tell.