Cathie Wood’s space ETF fails to blast off in debut despite huge trading volume

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What could rattle markets in 2021, even as vaccines are rolling out


Superstar investor Cathie Wood’s new space-focused ETF launched on Tuesday, and while shares slipped on day one, retail interest in the new product was out of this world.

The ARK Space Exploration & Innovation ETF
ARKX,
-0.98%

slumped $1.075 to $20.28 despite trading volume that saw $294 million worth of shares traded. That action reflected some uncertainty about Wood’s new highly-publicized security offering despite the manic attention from her devoted following in financial social media circles.

Wood, known for taking big bets on tech innovation in a way that blurs the line between investing and venture capital, made serious waves in 2020 with her ARK ETFs which curated batches of forward-thinking stocks that captured the zeitgeist of the unprecedented market bounceback from the coronavirus pandemic and benefited from the rise of retail traders stuck at home using no-fee trading apps.

The first few months of 2021 have been something of a different story for Wood, who has seen persistent outflows from her flagship Ark Innovation ETF
ARKK,
+2.92%
,
prompting some to speculate that she was looking to the stars for a new way to get her mojo back.

Her latest, ARKX, was billed as a collection of stocks in companies “engaged in the Fund’s investment theme of Space Exploration and Innovation.” The basket included everything from spacy picks like Virgin Galactic
SPCE,
+3.18%

and Lockheed Martin
LMT,
-0.60%

to more curious picks like Netflix
NFLX,
-0.11%

and the US Dollar.

Always a lightning rod for attention, Wood’s selection of space stocks met with curiosity and ridicule, with analysts and social media traders wondering aloud why Wood would include a streaming video behemoth and heavy machinery outfit Deere & Co.
DE,
+1.87%

over other companies thought to be more closely associated with outer space.

But that does not appear to have dampened interest in the ETF overall.

“Over 14 million shares traded in the first day is a tremendous success,” said Todd Rosenbluth, Head of ETF & Mutual Fund Research at CFRA. “ETFs usually take months if not years to gain such a following but ARK is an increasingly popular ETF manager to work with particularly for long-term thematic strategies.”

Rosenbluth also felt strongly that ARKX’s massive volume was a direct result of interest from retail traders who are much more likley to jump in on an ETF than more cautious institutional investors.

That sentiment was borne out on social media.

“I feel like Charlie Bucket when the teacher is asking how many Wonka Bars he bought,” one user posted on a Reddit board devoted entirely to discussion of the new ETF. “I was only able to get 15 shares.”

Still, some on social media were still left unimpressed on Tuesday.

“Might be just me, but this seems like one of her worst ETF’s,” posted one user on Reddit board r/wallstreetbets. “Also….. I want damn SpaceX, oh well.”

SpaceX, founded by Wood favorite Elon Musk, is a private company.



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