ARK Invest founder Cathie Wood has plenty of experience under her belt when it comes to losing money for investors.
Anyone that bought and held shares in her flagship ARK Innovation exchange-traded fund five years ago has in the meantime earned a paltry 5% return — factor in inflation and you’re in a hole. Had they instead invested in a rival tracking the benchmark Nasdaq Composite, they would be 82% wealthier now.
One of Wood’s few conviction trades that actually paid off for ARK Invest is Elon Musk’s Tesla, up a staggering 1,300% over that same five-year period. So it came as little surprise that the devout Christian looked up once more to the visionary tech mogul for help with her portfolio.
This time she can firmly blame Musk’s erratic mismanagement of Twitter for her losses.
Wood, who still enjoys a following due to her prescient call with Tesla, disclosed that her new venture capital fund reduced the value of its stake in Musk’s social media company by almost 50% based on accounting rules. As a result, the social media company needs to double its value to recover the losses.
“The write-down is not representative of our fundamental outlook and belief in the long-term return on investment we believe that it will have for our shareholders,” Wood told the Wall Street Journal in an article published on Monday.
Wood invested roughly $1 million into Twitter as part of Musk’s $44 billion deal to take the company private in late October. At its outset, it was the largest holding in the portfolio, but it is currently listed as the 14th largest.
Fidelity forced to book an even larger write-down
Depending on who you ask, Twitter prospects have either never been more exciting with a new ad-revenue sharing model and its unrepentant disdain for common conventions like community moderation—or it’s descended into dumpster fire-territory with employee mole hunts, technical breakdowns and unpaid bills piling up.
Either way, financially it’s still loss-making. This week Musk also dashed his own personal hopes that the platform could at least stabilize its liquidity reserves in the second quarter by not burning cash.
ARK Invest’s holding experienced a 47% decline, which may be considered conservative compared to Fidelity’s adjustment of a more significant 67% decrease in reflecting Musk’s value destruction.
Her confirmation does however indicate that the small group of high-flying tech moguls, including Oracle founder Larry Ellison, are likely all deep underwater on their combined $7.1 billion investment in Musk’s risky gamble.
But Wood is nothing if not dogged and remained undeterred in her conviction the Tesla CEO would eventually right the ship and make hay for her investors.
“I would love to get more stock at these price levels actually, but no one wants to let any go,” she added. “So that tells you something.”