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Cathie Woods, a star stock-picker and the founder of $29 billion ARK Invest, just launched a space-themed ETF on Tuesday. Although the engines (metaphorically speaking) seemed to slip on day one, overall retail interest rocketed the ETF off the globe.
Ranked 80 on Forbes’ list of “America’s Self-Made Women”, Cathie Woods is known for her keen eye for stock picks and her company, ARK Invest, which packages active stock portfolios in an ETF format. Woods is known for betting on tech innovation, and her latest ETF is no different.
According to its website, the ARK Space Exploration & Innovation ETF (ARKX) is an actively managed ETF that will invest “in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Space Exploration and innovation.” Some of the companies of focus are orbital aerospace, suborbital aerospace, enabling technologies, and aerospace beneficiary companies. Currently, that basket includes Virgin Galactic, Lockheed Martin, and even Netflix.
The full list can be viewed here.
According to CNBC, shares of Wood’s new ETF, ARKX, slipped about 1% on its first day, March 30, closing at $20.30 a share. While the trading volume saw a tremendous $294 million worth of shares traded, the poor performance by the market’s close reflected some uncertainty about Wood’s ETF security offering.
One of the main sources of skepticism in ARKX holdings was the strange combination of stock Wood’s has chosen- names that are not traditionally connected to the space industry. Still, many investors are dismissing the odd picks, as there is good reason for the odd holdings if a thorough investigation is done.
According to Ark Invest analyst Sam Korus, “Netflix has 200 million paying subscribers. In the U.S. alone, there’s over 40 million people who don’t have access to broadband and so, if a satellite solution can bring access to those customers and expand the addressable market and the topline for Netflix, then this is something that is very important.”
Although the popular streaming service has little to do with outer space aside from a few documentaries and fan-favorite films, the streaming service is directly connected to the work being done in Earth’s orbit, which will connect more people to broadband. Hopefully for Netflix, that equates to new subscribers.
MarketWatch reported a promising future for the ETF based on the recent performance of ARKX. Despite slipping 1% on day one, receiving over 14 million shares traded on the first day is still a success. According to Todd Rosenbluth, Head of ETF & Mutual Fund Research at CFRA, ETFs could take months or years to gain enormous followings like ARK, but Woods has already done that work.
The main source of the massive volume for ARKX could be attributed to the interest of retail traders, many of whom took to Twitter to express their excitement at the launch of the ETF, indicating their investment in the venture.
— Eric Balchunas (@EricBalchunas) April 1, 2021
— No Bull Investing (@nobullinvesting) March 30, 2021
Gonna grab a buttload of ArkX shares. Here we go!
— Danny Serrano (ElonDarko) (@CCDarko7empest) March 29, 2021
Social media has played a continuous role in the market, and there might be a connection between Cathie Wood’s following and the success of her ETFs.