Kathy Wood is shifting money from Tesla to SpaceX: an IPO insight
Cathie Wood's strategy and that of her fund ARK Investment Management has once again captured market attention. On the day of SpaceX's (SPCX) public stock listing, June 12, the fund executed a massive portfolio shift: acquiring a package of the space company's securities worth approximately $444 million, while simultaneously reducing its stake in Tesla. Both companies are owned by Elon Musk, but ARK analysts' priorities have clearly shifted.
The transaction was conducted on the day SpaceX shares surged 19% after trading began, and Musk's wealth exceeded the $1 trillion mark for the first time. ARK purchased 3.29 million shares at the offering price of $135 each. By the close of the session, this package was already worth $529.7 million. On the same day, the fund reduced positions not only in Tesla but also in Advanced Micro Devices, Rocket Lab, Roku, and Baidu.
Why Wood is cutting Tesla's stake
Tesla shares have long been an anchor of the ARK portfolio, and Wood publicly defended the company even during its toughest times. However, the situation has changed. Chinese competitors have nearly caught up with Tesla in production volumes, its margins are declining, and Musk's political activity is alienating some consumers. Against this backdrop, SpaceX looks far more attractive. The company's only profitable segment—Starlink satellite internet—is showing explosive growth. Wood first invested in SpaceX in late 2023, and it is now the largest position in ARK's venture portfolio, valued at approximately $1 billion. With the public listing, the fund can now increase its investments on the open market.
The purchase of $529.7 million in securities is a significant move even by ARK's standards. At the same time, SpaceX has recorded a cumulative loss of $41.3 billion as of March 31. Retail investors have been allocated 30% of the offering—three to six times higher than the usual level, indicating strong demand.
Context of ARK's returns
Since the start of the year, the ARK Innovation ETF has grown 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 Over the past 12 months, investors have withdrawn approximately $294 million net from the fund. 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 playbook: enter promising companies as early as possible. Thus, ARK bought Coinbase shares shortly after its listing in 2021, and recently the fund bet on CoreWeave. SpaceX has become its largest investment.
Whether SpaceX will turn a profit and allow for consistent earnings, or become another costly mistake for ARK, only time will tell. Personally, I believe the bet on Starlink and space infrastructure looks strategically sound, but the company's high valuation and massive losses make this asset extremely volatile.