Cathie Wood reshaped ARK's portfolio: on SpaceX's market debut day the fund bought SPCX shares worth about $444 million and at the same time cut its position in Tesla. Both companies belong to Elon Musk, but Wood's priorities shifted.

The trades took place on June 12, on SpaceX's IPO day: the securities rose 19%, and Musk's net worth exceeded $1 trillion for the first time. ARK acquired 3.29 million SpaceX shares at the placement price of $135 — by the close of trading this stake was already worth $529.7 million. On the same day the fund trimmed its stake in Tesla, as well as in Advanced Micro Devices, Rocket Lab, Roku and Baidu.

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Why Wood is cutting Tesla's stake

Tesla shares long remained ARK's main asset, and Wood publicly supported the company even in hard times. Now everything is different: Chinese competitors have squeezed Tesla, its profitability is falling, and Musk's political activity is scaring off some buyers.

With SpaceX the picture is the opposite. Its only profitable division — the Starlink satellite internet — is growing fast. Wood first invested in SpaceX at the end of 2023, and now this company is the largest position in ARK's venture portfolio (about $1 billion). After the IPO the fund can build up its holdings on the public market.

A package of securities worth $529.7 million is a serious move by ARK's standards. SpaceX recorded a cumulative loss of $41.3 billion as of March 31. Thirty percent of the placement was allocated to retail investors — that is higher than the usual level.

The context of ARK's returns

Since the start of the year, the ARK Innovation ETF has risen just 1.61%, while the S&P 500 added about 9%. Over the last 12 months investors withdrew about $294 million net from it. According to Morningstar's estimate, from 2014 to 2024 ARK «destroyed» about $7 billion of its investors' funds.

In the IPO sector Cathie Wood acts on a single scenario: enter promising companies as early as possible. Thus ARK bought Coinbase shares right after its listing in 2021 and recently bet on CoreWeave. SpaceX, however, became the largest investment.

Whether SpaceX will turn a profit and allow steady earnings or become yet another costly mistake for ARK — only time will tell.

Source: BeInCrypto