The top picks for Cathie Wood’s Ark Innovation ETF include Tesla Inc which accounts for approximately 10.40%, closely followed by Coinbase Global Inc which represents 6.09% of the total assets under management.
Ark Innovation ETF (NYSEARCA: ARKK) stock closed at around $73.54 on Monday. The $16.194-billion fund that solely invests in disruptive innovations is expected to decline further in the coming quarters according to historical accounts. While the traditional stock market coupled with the crypto market sustains huge losses, the ARKK is expected to feel the effect in a similar version.
Moreover, all eyes are on the Fed’s statements on the interest rate and the general market outlook on Wednesday. It is expected that the Fed led by Jerome Powell might alter the interest rate to higher rates in order to counter the rising inflation that is at a record high in the United States, 7%.
The top picks for Cathie Wood’s Ark Innovation ETF include Tesla Inc (NASDAQ: TSLA) which accounts for approximately 10.40%, closely followed by Coinbase Global Inc (NASDAQ: COIN) which is allocated 6.09% of the total assets under management.
According to Paulo Santos, a professional analyst at SeekingAlpha, although the market could rebound strongly in the coming days, there is a high chance that Ark Innovation’s stock could drop another 50% from here.
“ARKK’s resting place will be significantly lower than the current -50% return. Indeed, I’d go as far as to say that there’s potential for another 50% drop from here,” Santos noted.
Notably, Santos largely compared ARKK to the funds available during the dot-com era between 1997 to 2002.
Ark Innovation and the Macro Economics
The current stock and crypto dip had been largely trading predicted by most analysts last year, following the increasing inflation to record highs. Moreover, the hype on most stocks that began with WallStreetBets to Elon Musk on DOGE attracted regulators’ attention. Billionaire Mark Cuban had predicted that only companies with real world utilities will survive past the current market correction.
According to market data provided by Bloomberg, ARKK has dropped over 24% YTD, outpacing a 12% decline in the Invesco QQQ Trust Series 1 (QQQ) that tracks the broader technology sector. Meanwhile, the ARKG and ARKW have dropped approximately 24% and 23% YTD respectively through Monday.
With the crypto down significantly from the tops recorded late last year, Cathie Wood’s stock that is largely affected continues to feel the heat. Indeed, until the crypto market and the broader technology stock recovers, Ark Innovation stock will remain under siege, putting into consideration the fund does not pivot on other markets.