Ark Invest’s flagship fund has failed to keep up with the broader stock market’s rally this week.Earnings implosions from some of Ark’s top holdings like Roku and Teladoc added to the pain.Despite the sharp underperformance, Ark’s flagship fund has attracted nearly $2 billion in fund inflows year-to-date. Loading Something is loading.
Ark Invest’s flagship fund isn’t out of the woods yet as some of its top holdings continue to decline considerably after already falling more than 80%.
The Ark Disruptive Innovation ETF, spearheaded by Ark Invest’s Cathie Wood, fell more than 4% this week while the Nasdaq 100 surged nearly 4%. The ETF is down more than 50% year-to-date and is off more than 70% from its record high.
The ongoing divergence in performance between ARK and the broader market was originally sparked by a risk-off environment and rising interest rates, but the performance difference has since been exacerbated by strong earnings results from mega-cap tech giants that Ark doesn’t own, combined with poor earnings results from the unprofitable growth stocks it does own.
While Alphabet, Amazon, Microsoft, and Apple all reported better-than-feared results and saw their stock prices surge this week, some of Ark’s top holdings did the exact opposite. Roku reported an earnings disaster on Thursday, which sparked a more than 26% decline in its stock on Friday.
Teladoc, another darling of Ark Invest, saw its stock price plunge as much as 20% this week after reporting earnings results that failed to impress investors. Wood was unfazed by Teladoc’s poor earnings, as Ark bought the stock this week in several of its ETFs.
Both Teladoc and Roku are down nearly 90% from the record highs they experienced during the height of the COVID-19 pandemic, when “work-from-home” stocks were all the rage.
Another top holding of ARK Invest that experienced a big sell-off this week was Coinbase, which plunged as much as 25% after it was reported that the SEC is investigating the crypto exchange for allowing trading in tokens that could potentially be considered unregistered securities.
Despite all of the downside volatility, investors appear to be unfazed by Ark Invest’s continuation of poor performance this year. The Ark Disruptive Innovation ETF has attracted nearly $2 billion in fund inflows year-to-date, according to data from VettaFi.
The resilience of Ark’s investor base likely speaks to the investment firm’s ongoing communications that set bullish expectations for the very, very long-term. But how long investors are willing to put up with the losses remains to be seen.