Tesla stock's historic decline drags ARK Invest's flagship fund to new 5-year lows
Marco Bello/Getty; Savanna Durr/Insider
- Tesla's historic price decline has helped drag ARK Invest's flagship fund to five-year lows.
- The Ark Innovation ETF fell to its lowest level since August 2017 on Tuesday, while Tesla hit its lowest level since November 2020.
- Despite steep declines, Cathie Wood is buying more Tesla, and investors are buying more of the ARKK ETF.
One of Tesla's most ardent supporters is starting to feel the pain of the electric vehicle maker's brutal 2022 declines.
Cathie Wood's Ark Invest saw its flagship innovation ETF fall as much as 2% on Tuesday, hitting a new five-year low. The ARK Innovation ETF (ARKK) is now trading at its lowest level since August 2017.
Back then, the ARKK ETF had assets under management of just under $100 million. Today, ARKK has total assets under management of $6.7 billion.
The decline comes as Tesla, ARKK's third largest holding, suffers its worst decline since going public in 2010.
Tesla stock has wiped out nearly $800 billion in market value since the start of the year, according to data from YCharts. Meanwhile, the stock is down 66% from its November 2021 high, representing its worst drawdown on record.
On Tuesday, Tesla stock fell another 5% to hit its lowest level since November 2020.
The steep decline for Tesla has come amid growing concerns of high interest rates and an imminent economic recession, combined with investor concerns about CEO Elon Musk's committement to running the company as he shifts his focus to managing Twitter.
The swift decline in Twitter is a reversal in fortunes for ARKK, which rode the Tesla wave to great heights in 2021 as the stock price soared. And while it used to be able to point to Tesla as one of its few winners among its other holdings, that is no longer the case.
Every single one of ARKK's 30 holdings printed negative gains in 2022, with the best performing position down 24%.
Despite the pain, Wood isn't backing away from Tesla. Instead, she has added about 100,000 Tesla shares to the ARKK fund since last week. And to that effect, retail investors don't seem to be giving up on Cathie Wood. Net fund flows into the ARKK ETF are hovering around $1.5 billion since the start of the year, according to data from VettaFi.
The the net fund inflows into the ARKK ETF can't mask the pain that investors have suffered over the past two years, as the ARKK ETF has fallen 80% from its February 2021 high, erasing more than $20 billion in assets.