One of Elon Musk's biggest advocates could soon be rewarded, again, for her conviction

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Cathie Wood's latest big bet on Elon Musk is about to pay off.

stock :: 6hrs ago :: source - business insider

By Bradley Saacks

Cathie Wood's ARK Invest became the North Star for growth-obsessed retail traders during the pandemic.
The reputation of the firm and its founder took a hit when inflation and interest rates spiked, as performance fell.
But ARK Invest kept its focus on "disruptive" companies, and the coming wave of mega IPOs should be a boon.

One of Elon Musk's biggest advocates could soon be rewarded, again, for her conviction.

ARK Invest's Cathie Wood made a name for herself because of her unflinching trust in Musk, Tesla, and a portfolio of pioneering tech companies, even as rising interest rates crushed growth stocks and turned her flagship fund from a pandemic darling to a so-called wealth destroyer.

Now, the coming SpaceX IPO — which is the biggest holding in Wood's $1 billion internal venture fund — could become the clearest vindication of an investing style hyper-focused on "disruptive" technologies and little else. The fund first bought into the company in late 2023, filings show, when the company was valued at under $200 billion. It added to its position in 2025 and gained additional exposure through its stake in xAI, which merged with the rocket ship company earlier this year. SpaceX's IPO is targeted for a $1.75 trillion valuation.

The fund's other top holdings, OpenAI and Anthropic, are also expected to follow SpaceX into the public markets, potentially providing another windfall for the manager and its backers.

"This is the convergence of a lifetime," Wood said on a recent YouTube stream where she mentioned developments on the moon and Mars as a part of her long-term view on the company.

It's also a chance for ARK, which manages roughly $16 billion, to prove its unorthodox worldview can once again generate eye-popping returns. It's a manager known for "high conviction in every one of its holdings," said Robby Greengold, an analyst at Morningstar who covers ARK, and a focus on companies with a high potential for both success and failure.

"The range of outcomes is wide," he said.

Queen of Reddit traders to big losses

Roughly five years ago, a Business Insider profile of Wood noted that the tech-focused investor had won the hearts and assets of "memelord traders and boomer investors alike."

It was a high point for Wood's public image and ARK Invest, which Wood started in 2014 after a stint at AllianceBernstein. Since delivering returns of more than 150% in 2020 and raising billions in 2021, the firm's flagship ETFs' assets have dropped by roughly two-thirds, thanks to a 67% loss in 2022, when inflation brought on by government stimulus during the pandemic forced central banks to increase interest rates.

But ARK has always kept a long-term view, and the wave of mega IPOs on the horizon has provided a "validation" of the firm's ultra-long-term view, said Brett Winton, the firm's chief futurist, in an interview with Business Insider.

A pre-COVID public report from ARK — the firm produces a tremendous amount of public research, one of the reasons it endeared itself with Reddit-based retail traders during the pandemic — states early on that "AI is going to change the way that software is written," Winton said.

"And five years later, it's happening, and as it turns out, that is a multi-trillion dollar opportunity, and it's being realized now," he said.

Even as the firm's public stock holdings were taking a beating in 2022, the manager was focused on gaining greater access and exposure to the most cutting-edge (and cash-burning) companies. ARK launched its interval venture fund that year. The fund also has stakes in prediction market Kalshi and next-gen computing company Tenstorrent and has averaged a 29% gain each year since it launched.

A convergence around Musk

Tasha Keeney, the firm's director of investment analysis, doesn't think of SpaceX as a tech company or telecomms company in the way sell-side researchers and traditional investors do.

"The classification system is broken. And that's why we choose to cover things in a thematic way at ARK Invest, on a technology basis," Keeney said in an interview with Business Insider. Placing a company like SpaceX or Tesla under an analyst solely focused on telecomm companies or automakers is too limiting, Keeney said, who reiterated Wood's point about companies, especially Musk's, converging into something bigger than the markets have ever seen before.

It's why Wood has always been a big supporter of Musk's vision at Tesla and now SpaceX. The world's richest man has often blurred the lines between traditional sectors at his companies, which has both frustrated and thrilled investors. Greengold noted that Wood's backing of Musk dates back to her days at AllianceBernstein, when she was a Tesla investor.

"Equity capital is perpetual capital. Equity capital should be interested in the long term, literally the infinite interest of the business, not the quarterly interest. And so ARK, from its start, has focused on the long-term returns of businesses," Winton said.

This steadfast belief in their bets is one of the reasons Morningstar is iffy on the firm.

Greengold said there "continues to be concerns about ARK's approach to risk management," though the hiring of a chief risk officer last year — Dan Rodriguez, who previously worked at hedge funds like P. Schoenfeld and Point72 — is a positive development.

READ: Why soaring memory prices could be Nvidia's next big advantage

In a way, these worries about ARK's risk management echo what investors have said about Musk's leadership style. Both Wood and Musk have stressed to skeptics and critics that they should trust the long-term vision during bouts of volatility.

And she and her deputies plan to help Musk push his science-fiction-flavored worldview out to the masses.

"We'll certainly be out there educating," she said on the livestream.

Source: Business Insider