The ARK Innovation ETF (ARKK), managed by Cathie Wood's Ark Invest, experienced a sharp 7.37% pre-market plunge on Monday. This significant drop comes amid mounting criticism of one of its major holdings, Tesla, and skepticism surrounding Wood's bullish predictions for the electric vehicle maker.
The downward pressure on ARKK appears to be largely driven by concerns over Tesla's performance and valuation. Recent analysis suggests that Tesla's deliveries have fallen by 13% year-over-year in the first quarter of 2025, marking its lowest delivery figure since Q2 2022. This decline, coupled with growing inventory and price cuts, has raised questions about the company's growth prospects and market position.
Critics argue that Cathie Wood's price target of $2,600 for Tesla within five years is unrealistic, potentially leading to a $10 trillion market cap. Instead, some analysts suggest a more reasonable valuation could see Tesla's stock price fall to as low as $24, representing a 90% decline from current levels. This stark contrast in valuations and the growing skepticism around Tesla's future performance appear to be weighing heavily on investor sentiment towards ARKK, given the ETF's significant exposure to the electric vehicle manufacturer.
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