Cathie Wood, chief of Ark Investment Management, is known for her bold trades on tech stocks.
She sometimes buys stocks on the way up, hoping for more gains ahead. Sometimes, she sells them during stock dips to avoid further losses.
That’s what she just did. She sold a tech stock that is down 14% over the past month.
Wood’s flagship fund, the Ark Innovation ETF (ARKK) , underperformed the market in 2024.
Although it briefly outpaced the Nasdaq Composite and the S&P 500 in January and early February, ARKK is down roughly 9% year-to-date as of Mar. 7, while the Nasdaq Composite and S&P lost 5.8% and 1.9% during the same period, respectively.
The fund’s recent struggles stem largely from Tesla (TSLA) ’s 35% decline this year. Tesla is the fund's largest holding. Tesla is also off 46.2% from its 52-week high, reached in December.
Opinions on Wood vary. To her supporters, she is a visionary with a remarkable 153% return in 2020. However, her longer-term performance has raised doubts about her aggressive approach.
As of Mar. 6, Ark Innovation ETF, with $6.8 billion under management, has delivered an annualized three-year return of negative 4.69% and a five-year return of 0.51%.
In comparison, the S&P 500 index has a three-year annualized return of 11.56% and a five-year return of 15.85%.
The Ark Innovation ETF has faced $2.4 billion in net outflows over the past 12 months through Mar. 6, including an outflow of $48.74 million in just the past five days.Marco Bello/Getty Images
Cathie Wood’s investment strategy explained
Wood’s investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values.
Investment research firm Morningstar criticized Wood and her ETFs last year.
Investing in young companies with slim earnings “demands forecasting talent, which Ark Investment Management lacks,” wrote Morningstar analyst Robby Greengold. “Results range from tremendous to horrendous.”
Although the recent tariffs have weighed heavily on stock markets, Wood expressed optimism about a shift to looser regulation under Donald Trump’s presidency.
She said on Mar. 4 that the Trump administration could be even better for investors than Ronald Reagan’s pro-business era, according to Bloomberg.
“The Reagan revolution — and I was there and it was so enjoyable — it was the heyday, the golden age of active equity management,” Wood said. “That’s coming back. I think it’s coming back big time. I think this will dwarf that, and that was pretty good.”
Not all investors share Wood's confidence. Data from ETF research firm VettaFi shows that the Ark Innovation ETF has faced $2.4 billion in net outflows over the past 12 months through Mar. 6, including an outflow of $48.74 million in just the prior five days.
Cathie Wood sold $4 million of Roblox
On Mar. 6, Wood’s Ark Innovation ETF sold 67,967 shares of game developer Roblox Corp. (RBLX) .
That chunk of stock was valued at roughly $4 million.
Roblox stock plummeted in February and early March. Wood bought this stock on Feb. 6 and Feb. 7, just as it started to drop after its fourth-quarter earnings results.
On Feb.6, the online gaming platform released its Q4 2024 earnings report. It reported a surprising 4% drop in daily active users (DAUs), falling to 85.3 million, well below Wall Street’s expectations of 88.4 million.
Engagement hours also declined by 9.7%, totaling 18.7 billion hours, signaling that even active users were spending less time on the platform.
Roblox rose during the pandemic, and it has become a leader in the user-generated gaming space. Its platform allows players to create and share games in exchange for a portion of revenue.
However, the company faces controversies over safety and addiction. In August 2024, Turkey blocked access to the platform, citing concerns over child safety. Roblox has appealed to Turkish authorities, but there hasn't been much progress.
Investment firm Wedbush reiterated an outperform rating on Roblox and a stock price target of $83 following the earnings.
"We are confident Roblox will continue to drive bookings growth of 20%+ annually driven by the growth in the core business, the implementation of ads, and higher revenue share on paid access experiences," the firm said.
Roblox stock's price fell 10.4% in February and is off an additional 10% so far in early March. Part of the declines are due to a weak overall stock market.
In late February, a sell-off in tech stocks driven by disappointing Nvidia results dragged down the Nasdaq 100 and impacted growth stocks like Roblox. Additionally, looming tariffs proposed by President Donald Trump also added economic uncertainty.
Roblox is one of Wood’s biggest holdings in her portfolio. As of Mar. 7, the stock accounted for 6.82% of the Ark Innovation ETF and ranked as the fourth-largest position.
