Staggering 3-year losses of $1K investment in Cathie Wood's ARK ETF leave investors stunned.
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Staggering 3-year losses of $1K investment in Cathie Wood’s ARK ETF leave investors stunned.

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Once upon a time, in the almost mythical years of 2020 and 2021, Cathie Wood’s ARK Innovation ETF (ARKK) – a highly speculative exchange-traded fund focused on promising technology stocks – was the talk of the town. It consistently outperformed the broader market, making a series of interesting and successful investments. From March 2020 to its peak in February 2021, the ETF soared by approximately 313% after the end of the COVID-19 recession.

However, things have taken a turn since then, and ARKK seems to have gone from one major mistake to another. As of May 31, 2024, the ETF is only $5 above its lowest point during the pandemic, with a current price of $42.79.

ARKK all-time price chart. Source: Finbold

To shed light on the staggering rise and subsequent losses of ARKK, Finbold decided to analyze how much a $1,000 investment made near the peak in May 2021 would have lost.

Three years ago, in May 2021, ARKK seemed to be in a correction phase, having fallen slightly from its highs in the first quarter of the year. However, it still appeared strong with a price above $100. If an investor had bought $1,000 worth of ARKK shares on May 28, 2021 – a reasonable trade considering the fund’s recent performance at the time – they would have received 8.92 shares, as the ETF’s price stood at $112.10 on that day.

With ARKK’s current price at $42.79, those shares would now be worth approximately $381. This means that an investment in Cathie Wood’s technology-focused ETF would have incurred a loss of $619, a decline of 61.9%.

ARKK’s poor performance can be attributed to a series of questionable and poorly timed trades, in addition to having Tesla and Roku account for about 20% of the ETF’s holdings. These two stocks have experienced significant drops in the stock market in 2024.

One notable blunder occurred between November 2022 and January 2023 when Cathie Wood decided to sell the ETF’s position in the semiconductor giant Nvidia. At that time, Nvidia was just beginning to recover from a prolonged downturn that lasted from November 2021 to October 2022. Since January 2023, Nvidia shares have risen as much as 423.70%.

Recent activity does not indicate any improvement in ARKK’s fortunes. In late May 2024, the ETF purchased 200,000 shares of a company called UiPath just before an earnings report. Shortly after the trade and the publication of the report, UiPath’s stock fell by nearly 40%.

It is important to note that the content on this site should not be considered investment advice, as investing is speculative and carries risks to your capital.

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