In the last month, Ark Invest’s (ARKK) flagship ETF lost billions in assets managed. Speculators did not
exit the fund overall. Instead, inflows rose occasionally. Why are investors buying ARKK stock as it falls
further?
ARKK’s top holdings are Tesla (TSLA), Roku (ROKU), Zoom Video (ZM), Exact Sciences (EXAS), and Block
(SQ). At a 3.92% allocation, Coinbase (COIN) is a heavy allocation. The cryptocurrency platform lost half
its value in the last month after posting quarterly results. It traded to as low as $40.83 before buyers
snapped up shares.
ARK added more than 500,000 shares of COIN stock across three of its ETFs. Fintech Innovation (ARKF)
and Next Generation Internet (ARKW) added shares.
Investors buying Coinbase or cryptocurrency have no way of predicting its direction. Bitcoin prices
depend on sentiment and the perception of its value. Both are highly unpredictable.
ARKK has a high dependence on Tesla. Recently, CEO Elon Musk secured funding to buy Twitter (TWTR)
by backing the loan with TSLA stock. He also sold TSLA stock and avoided around 20% in losses to pay for
Twitter. Musk is unpredictable. He said he would pause his buyout of Twitter amid the 5% bot and fake
account metric. Still, the CEO is on the hook for $1 billion if he tries to get out of the deal.
For now, ARKK will offer traders profits from volatility. Long-term tech investors should avoid the erratic
ETF.
