ARK Destroyed More Wealth Than Any Asset Manager Over The Previous Decade

(Click on image to enlarge)

ARKK ARK Innovation Fund courtesy of StockCharts/Com annotations by Mish

Cathie Wood Investors Jumping Ship

The Wall Street Journal reports Cathie Wood’s Popular ARK Funds Are Sinking Fast

Cathie Wood’s investors are jumping ship.

They rushed into her funds and won big during the pandemic, when the star fund manager became a social-media sensation by making bold bets on disruptive technology stocks such as Tesla (TSLA), Zoom Video Communications (ZM) and Roku (ROKU). They largely stuck with her when the funds’ fortunes reversed after the Federal Reserve raised interest rates. Now, after years of bruising losses, many of them have had enough.

Investors have pulled a net $2.2 billion from the six actively managed exchange-traded funds at her ARK Investment Management this year, a withdrawal that dwarfs the outflows in all of 2023. Total assets in those funds have dropped 30% in less than four months to $11.1 billion—after peaking at $59 billion in early 2021, when ARK was the world’s largest active ETF manager.

Shares of Tesla, the largest holding, are down almost 45% this year and trading around $142. Wood has been buying the dip and reiterated her moonshot five-year price target of $2,000 in a CNBC appearance earlier this month.

By the end of last year, ARK funds had destroyed more wealth than any other asset manager over the previous decade, losing investors a collective $14.3 billion, according to Morningstar. ARK’s biggest inflows came in the months surrounding the innovation fund’s February 2021 peak, unfortunate timing for many investors.


Skill Assessment

It takes skill to be the worst. Not anyone can do it.

First, you have to make wildly speculative bets. Then you need to develop a cult following right at the top. Then you have to make mistake after mistake on the way down.


Tesla the Big Bet

(Click on image to enlarge)

Tesla TSLA monthly chart courtesy of StockCharts/Com annotations by Mish

Early invertors in Tesla are still spectacularly ahead. You are even extremely ahead if you got in as late a 2020.

Otherwise, unless you caught the late 2022 bottom, you ate likely behind.


Tesla TSLA Weekly Chart

(Click on image to enlarge)

Tesla TSLA weekly chart courtesy of StockCharts/Com annotations by Mish


Tesla Technical Picture

The Tesla weekly chart looks ominous. There are a couple descending triangle patterns (bearish) one can spot depending on how wide you like to make your crayons.

Triangles or not, Tesla is right on support. There is no reason to expect support to hold and every reason fundamentally to expect that it won’t.

Next support is at 100, then 60 then the mid 20s.


Absurd Targets

(Click on image to enlarge)

ARK’s Monte Carlo Simulation Results posted at Ark Investments

$2,000 is an absurd target but she has placed far higher valuations before.

Please recall my April 19, 2022 post Cathie Wood’s Ark Open Source Model Predicts Tesla Shares Will Hit $4,600 by 2026


Assumptions

  • Tesla sold 900,000 vehicles in 2021. ARK assumes the bear case scenario of 10 million cars in 2026 with the bullish case at 17 million.
  • Tesla robotaxi delivery best case starts this year, worst case 2030, otherwise between 2023 and 2026 with a midpoint of 2024. Tesla will commercialize autonomous ride-hail in 2024. 
  • Tesla enters the insurance business and will sell 50% of its cars with insurance by 2026.
  • Tesla will capture 50% of the autonomous market outside China and 10% in China.

That’s quite amusing vs current conditions.


Tesla’s Deliveries Drop for First Time Since 2020

Tesla’s (TSLA) quarterly deliveries in the first quarter of 2024, are down 8.5% from a year earlier. It’s the first quarterly decline since 2020.

(Click on image to enlarge)


Tesla blames production setbacks for the Decline in Quarterly Deliveries, but falling demand is the bigger issue.

On April 2, I commented Tesla’s Deliveries Drop for First Time Since 2020, It’s Demand Not Supply

 Tesla’s heydays of surging demand growth is over. Competition is increasing and relative demand growth, if not absolute demand growth, is falling.

If Tesla can scale up semi production that would be a big boost. But Elon Musk has been promising 50,000 semis a year, every year for four years and has delivered a grand total of 100.


Only 35 Class 8 Truck EV Charging Stations

One of the things holding up use of electric semis is expense. A second is the number of charging stations.

Please note there are 4 Million Semis on the Road, Only 35 Class 8 Truck EV Charging Stations

And Electrek says Tesla’s giga factory is only about 30% complete and Tesla hasn’t expanded the facility for years.


Elon Musk Fires 10 Percent of Tesla Workforce

On April 15, I noted Elon Musk Fires 10 Percent of Tesla Workforce, Prepares for “Next Phase of Growth”

In preparation for more growth, Musk issues a memo announcing an workforce cut of 10 percent and two top Tesla (TSLA) executives resign.

One does not prepare for growth by firing staff, pausing construction of the giga semi factory, and repeating the same hollow lies every year since 1016.


Tesla is Dead Last in Autonomous Driving

(Click on image to enlarge)


More Elon Musk Vaporware

On April 8, I commented Tesla’s Robotaxi August Launch Will Be More Elon Musk Vaporware

On August 8, Elon Musk will make an announcement on robotaxis. Tesla lags Waymo so badly that Musk is not even near the ballpark.

Cathie Wood is married to a position in which she cannot and will not see the obvious.


More By This Author:

New Home Sales Rise 8.8 Percent After 3.8 Percent Negative Revision
A Big Deflationary Push From China But Will Biden Or Trump Allow That?
When Should You Collect Social Security? Other Retirement Decisions?

Disclaimer: The content on Mish's Global Economic Trend Analysis site is provided as general information only and should not be taken as investment advice. All site content, including ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.