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Shocking 3-year losses on a $1K investment in Cathie Wood’s ARK ETF

Shocking 3-year losses on a $1K investment in Cathie Wood's ARK ETF

Once upon a time, in the near-mythical years 2020 and 2021, Cathie Wood’s ARK Innovation ETF (ARKK) – an exchange-traded fund focused on promising yet highly speculative technology stocks – was all the rage.

Indeed, during the two years, ARKK was massively outperforming the broader market with a string of interesting and successful investments. Between March 2020 – once the COVID-19 recession ended – and the fund’s peak in February 2021, Cathie Wood’s ETF soared approximately 313%.

Things have changed significantly since then, and ARKK has seemingly done little other than go from one major mistake to another. In fact, by the time of publication on May 31, 2024, the ETF is a mere $5 above its pandemic-era lows at the press time price of $42.79.

ARKK all-time price chart. Source: Finbold

How much would a $1,000 ARKK investment in May 2021 have lost?

Given ARKK’s staggering rise during COVID-19 and the equally staggering losses in the last three years, Finbold decided to examine just how much would have a $1,000 investment made near the peak lost.

Exactly three years ago, in May 2021, Cathie Wood’s ARKK appeared to be in a correction, given that it fell somewhat from its highs in the first quarter of the year but was still seemingly strong with a price above $100.

Had an investor bought $1,000 ARKK shares on May 28 2021 – arguably a reasonable trade given the fund’s recent performance at the time – they would have gotten 8.92 shares as the ETF’s price stood at $112.10 on the day.

Given that ARKK’s price today stands at, as stated previously, at $42.79, these shares would be worth almost exactly $381. This means that an investment in Cathie Wood’s technology-focused ETF would have lost $619 and fallen 61.9%.

ARKK’s worst trades

Along with having Tesla (NASDAQ: TSLA) and Roku (NASDAQ: ROKU) account for about 20% of the ETF’s holdings – two stocks that have experienced significant stock market drops in 2024 – ARKK is also notable for meaning a string of questionable and generally ill-timed trades.

Perhaps the most notable blunder occurred between November 2022 and January 2023 when Cathie Wood cleared the ETF’s position in the semiconductor giant Nvidia (NASDAQ: NVDA).

Rather famously, the blue-chip chipmaker was at the time at the very start of its recovery from a protracted downturn that lasted roughly from November 2021 to October 2022. 

Since the end of January 2023, NVDA shares are up as much as 423.70%.

What is worse, more recent activity shows little evidence that ARKK’s fortunes are about to improve. Late in May 2024, the ETF bought 200,000 shares of a company called UiPath (NYSE: PATH) just ahead of an earnings report. Almost immediately after the trade – and just after the report was published – PATH fell almost 40%.

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