The ARK Innovation ETF (ARKK), managed by Cathie Wood's ARK Invest, saw a significant pre-market plunge of 6.84% on Thursday. This sharp decline comes amid concerns surrounding Tesla, one of the fund's major holdings, as the electric vehicle giant faces production and delivery challenges.

Tesla, a key component of ARKK, recently reported disappointing first-quarter production and delivery data. The company produced 26,000 more vehicles than it delivered in the quarter, suggesting an inventory build-up. This news has likely contributed to investor unease, as it raises questions about Tesla's near-term growth prospects and market demand for its vehicles.

While ARK Invest's Cathie Wood maintains a bullish long-term outlook on Tesla, with a $2,600 price target for 2029 based largely on the potential success of Tesla's upcoming Cybercab robotaxi service, the market appears to be focusing on more immediate concerns. The recent production and delivery decrease, coupled with increased competition in the EV market and potential brand impact from CEO Elon Musk's controversial public persona, may be weighing heavily on investor sentiment.

As ARKK is known for its concentrated bets on innovative technology companies, the fund's performance is closely tied to the fortunes of its major holdings like Tesla. The pre-market plunge suggests that investors are reassessing the near-term prospects of ARKK's portfolio companies, particularly in light of recent challenges faced by key holdings. This decline underscores the potential volatility and risks associated with thematic ETFs focused on disruptive innovation.