Kathy Wood restructures ARK portfolio: betting on SpaceX instead of Tesla on the day of the historic IPO
June 12, 2024, became a landmark day for the market: Elon Musk's SpaceX finally went public. On the same day, Cathie Wood's ARK Invest executed a massive capital reallocation, purchasing approximately $444 million worth of SPCX shares while simultaneously reducing its stake in Tesla. This decision clearly demonstrates a shift in priorities for one of the most renowned investors in innovative technologies.
On its IPO day, SpaceX showed impressive growth, with shares rising 19%, and Elon Musk's net worth exceeded $1 trillion for the first time. ARK acquired 3.29 million shares at the offering price of $135 each. By market close, this stake was already worth $529.7 million. Concurrently, the fund reduced positions not only in Tesla but also in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
Why is Wood changing horses midstream?
Tesla shares have long been the anchor of ARK's portfolio, and Cathie Wood publicly supported the company even during its toughest times. However, the situation has now changed. Chinese competitors such as BYD and NIO have nearly caught up with Tesla in terms of technology and sales volumes. Musk's own profitability is declining, and his political activity is alienating part of his loyal audience.
With SpaceX, the picture is diametrically opposite. The company's only profitable division—Starlink satellite internet—is experiencing explosive growth. Wood first invested in SpaceX back in late 2023, and it is now the largest position in ARK's venture portfolio (approximately $1 billion). After the IPO, the fund can increase its investments on the public market, providing additional flexibility.
ARK's return context: a bet on growth or risk?
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 Over the past 12 months, investors have withdrawn approximately $294 million in net funds from the fund.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's assessment, from 2014 to 2024, ARK "destroyed" about $7 billion of its investors' capital—an impressive figure for a fund positioning itself as a leader in innovation.
In the IPO sector, 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 its largest investment.
My comment as an analyst: Cathie Wood's strategy remains high-risk. The bet on SpaceX is not just diversification but an attempt to offset losses from Tesla. The question is whether Starlink and other SpaceX divisions can generate stable profits, or whether ARK will once again fall into the trap of a "brilliant idea but poor economics." For now, the market is giving the fund a credit of trust, but SpaceX's fundamental metrics (cumulative loss of $41.3 billion as of March 31) give pause for thought.