ARK Invest Drops $54 Million on SpaceX Stock in a Single Week

Since SpaceX’s IPO last month, Cathie Wood has been buying shares in the company in a way that seems almost methodical. Wood’s ARK Invest has been buying on the way up, buying on the way down, and buying again just to make sure the point lands, while many investors are still debating whether to trust a stock that has swung wildly in its first few weeks of public trading.

Based on intraday low prices on the days of purchase, ARK Invest bought 348,725 shares of SpaceX, ticker SPCX, last week alone for about $54.5 million. This comes after a $32 million acquisition the week prior, a $7 million acquisition the week prior, and an initial acquisition of 3.3 million shares on the day SpaceX went public in June. Prior to all of that, ARK had already made a private investment in the business. Here, it’s difficult to ignore the pattern.

One session did not contain all of the purchases. Last week, ARK purchased SpaceX stock every day but Thursday. With 181,847 shares purchased for at least $27.2 million, Wednesday was the busiest day. Friday saw 116,971 shares, or about $17.9 million. This is not a company that is just getting started. It appears to be more akin to conviction buying, which occurs when a portfolio manager has already completed the calculations and only needs the price to eventually cooperate.

At 8.3% of the fund, SpaceX is currently the largest holding in ARK’s Space & Defense Innovation ETF. It also has significant positions in three other ARK products: ARKK at 4.4%, ARKQ at 5.9%, and ARKW at 3.2%. ARK has almost 4.8 million shares in all of its ETFs as of this week. That’s a lot of trust to put in a company whose stock has already dropped 29% from its peak close of $211 and which has only been publicly traded for about a month.

Wood has been transparent about the reasons. According to ARK’s Big Ideas research report, which was released earlier this year, SpaceX’s aerospace operations, Starlink satellite internet service, and a longer-term thesis about orbital data centers could propel the company to an enterprise value of $3.1 trillion by 2030. Since 2008, SpaceX has lowered the cost of sending a kilogram of mass into space by about 95%, to about $1,000 per kilogram. This makes the cost-to-orbit argument genuinely intriguing. According to ARK, that figure might drop even lower, to about $100, opening up opportunities that are currently more akin to science fiction than business plans.

It’s still very much up in the air whether orbital data centers will be built in five years or twenty-five. Numerous engineers and semiconductor specialists have noted that large, costly solar arrays would be needed to produce significant computing power in space. The laws of physics are not very lenient. Wood may be correct about the course and somewhat optimistic about the timeline, which is a typical stance for a growth investor.

Wood sold about 570,000 shares of Alibaba, a company that ARK has owned since 2014 and only recently returned to after a multi-year hiatus, in order to finance one of her recent SpaceX purchases. Her decision to leave Alibaba in order to purchase SpaceX reveals something about her current allocation philosophy. In addition to SpaceX, last week’s activity involved investing about $24.5 million in Eli Lilly, $17.8 million in Meta, and roughly $16 million in Circle, a cryptocurrency infrastructure company that was just given permission by regulators to establish a national trust bank. Additionally, ARK trimmed Roku prior to the settlement of its Fox Corp acquisition, sold AMD close to its all-time high, and sold shares in a number of biotech companies.

On Monday morning, SpaceX’s stock dropped more than 4%, momentarily closing within 2% of its $135 IPO price. There is actual volatility. However, it appears that Wood’s team sees every decline as an opportunity rather than a red flag based on ARK’s trading logs over the past few weeks. Depending on where the stock is trading in a few years, that may or may not be interpreted as discipline or stubbornness.