One of the most ardent supporters of Elon Musk’s Tesla, investor Katie Wood, who was dubbed the “money tree” of Wall Street, began to feel the pressure due to the historic drop in the automaker’s shares, according to Markets Insider.
Cathie Wood’s flagship innovation ETF Ark Invest, called ARK Innovation, fell 2% again on Tuesday, hitting a new 5-year low.
An ETF (Exchange Traded Fund) is a diversified collection of assets (similar to a mutual fund) that trades on a stock exchange like stocks.
And the Ark Invest ETF is now trading at its lowest level since August 2017, when it managed less than $100 million in assets. For comparison, today the same fund has assets of 6.7 billion dollars.
ARK Innovation’s fall comes as Tesla’s share price has fallen the most over the past year since it went public in 2010.
Tesla has lost nearly $800 billion in market capitalization since the start of 2022, falling 66% from its peak in November 2021.
While Tesla’s share price showed signs of recovery in premarket trading on Monday, it fell another 5% on Tuesday, hitting its highest level since November 2020.
Money no longer falls from Wall Street’s money tree
The situation represents a dramatic reversal for ARK Innovation, which saw impressive growth last year on the back of Tesla’s soaring share price.
The electric car maker was the clear leader in Wood’s ETF, accounting for more than 10% of the fund’s assets. During his rise, Wood was nicknamed the “money tree” or the “hottest investor” on Wall Street, but now it’s not just Tesla’s decline that is giving him a headache.
Each of the 30 holdings ARK Innovation owns has posted negative returns this year, with the best of them down “just” 24% amid a general decline in so-called “growth stocks,” stocks that rely on continued growth, and the technology sector in as a whole
The situation also prompted some analysts to recall another spectacularly wrong prediction Wood made last year, when he estimated in September that the price of bitcoin could reach $500,000.
However, in an interview with CNBC at the time, Wood explained that the price forecasts that she and her company make are based on a 5-year horizon.
Source: Hot News
Mary Robinson is a renowned journalist in the field of Automobile. She currently works as a writer at 247 news reel. With a keen eye for detail and a passion for all things Automotive, Mary’s writing provides readers with in-depth analysis and unique perspectives on the latest developments in the field.