Tesla isn't the only stock clobbering Cathie Wood's ARK Innovation ETF this year. Another big loser is pushing the ETF near the bottom of the pack.
Coinbase, the cryptocurrency stock ARK Innovation rode higher last year, is joining Tesla as a huge anchor this year, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. And that's a big problem, as Coinbase and Tesla are the two largest holdings in the ETF. ARK Innovation is down $473 million on just these two stocks this year, based on current positions.
The result? Pain. ARK Innovation posted a negative 11.6% total return this year so far, says Morningstar Direct. That makes it the fourth worst-performing actively traded U.S. diversified ETF this year. Even behind rival funds from T. Rowe Price and Fidelity. And that hurts as ARK Innovation ended up No. 1 in the category last year.
Tesla And Coinbase Crumble
Tesla is just the most high-profile house of pain for ARK Innovation. And it's a whopper.
Shares of the electric vehicle maker sputtered more than 12% Thursday. The company late Wednesday reported a quarterly adjusted loss per share of 71 cents a share. That missed estimates by 4%. Additionally, revenue for the quarter came in at just $25.2 billion, falling short of forecasts by 2.3%.
That's an outsized issue for ARK Innovation. Tesla is a 7.8% position in the portfolio (No. 2 in the portfolio). That's just behind the top 8.3% position in Coinbase. And there's the next issue.
Shares of Coinbase are down nearly 31% this year. That loss alone shaved off $282.9 million in value from the ARK Innovation ETF's position. And the problems for the portfolio extend deeper still. All but two of ARK Innovation's top 10 holdings are down this year so far. They're off more than 10% each on average.
This would be less of an issue if ARK Innovation's rivals were suffering, too. They're not.
Beating ARK At Its Game
While ARK Innovation is down this year, its rivals kicked off 2024 with a bang.
iShares MSCI USA Momentum Factor ETF returned 6.3% so far. Rather than Coinbase and Tesla, this ETF is loaded up on the year's dynamic duo stocks. Nvidia is No. 2 with a 5.4% position and Microsoft is No. 5 at 4.8%.
A number of hot blue-chip growth funds are also dishing it out to ARK Innovation. T. Rowe Price Blue Chip Growth ETF is up nearly 5% this year. Its number one holding is Microsoft at 13.4%. The AI giant isn't even part of ARK Innovation.
If investors learned anything from Wood's remarkable comeback last year, it's to never rule out ARK Innovation. But the ETF certainly has a big hole in the portfolio to repair.
Largest Positions In ARK Innovation
Most are off to a rough start in 2024
| Company | Ticker | Weight (%) | YTD % ch. | Loss / gain ($ millions) |
|---|---|---|---|---|
| Coinbase Global | 8.30% | -30.5% | -$282.9 | |
| Tesla | 7.77% | -26.4% | -$191.0 | |
| Roku | 7.70% | -3.2% | -$19.9 | |
| Zoom Video | 7.42% | -6.1% | -$36.7 | |
| UiPath | 6.57% | -8.1% | -$45.5 | |
| Block | 5.97% | -19.3% | -$111.0 | |
| CRISPR Therapeutics | 4.93% | 0.0% | $0.2 | |
| Roblox | 4.35% | -9.7% | -$37.0 | |
| Twilio | 4.28% | -4.5% | -$15.7 |
