Cathie Wood pares $21 million of beaten-down tech stock

The Nasdaq Composite gained 30% in 2024, while Ark Innovation ETF returned 8.4%.

Feb 12, 2025 - 17:42

Cathie Wood pares $21 million of beaten-down tech stock

Cathie Wood, head of Ark Investment Management, is known for making bold bets — but she’s not afraid to change course when the market proves her wrong.

That’s what she did this week. She unloaded a tech stock that tumbled nearly 50% last year.

Her stock-picking strategy sometimes works: The flagship Ark Innovation ETF (ARKK) returned 8% this year as of Feb. 11, while the S&P 500 Index and the Nasdaq Composite gained roughly 3% and 2%, respectively.

Opinions on Wood vary. To her supporters, she is a visionary who proved her instincts in 2020 with a remarkable 153% return. Her longer-term performance has raised doubts about her aggressive approach.

As of Feb. 11 Ark Innovation ETF, with $6.3 billion under management, has delivered an annualized three-year return of negative 5.15% and a five-year return of 1.7%.

In comparison, the S&P 500 index has a three-year annualized return of 12.88% and a five-year return of 14.34%.

Over the past year Ark Innovation ETF has seen a net outflow of nearly $3 billion, with $32 million exiting in the past month, according to ETF researcher VettaFi.
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Cathie Wood’s investment strategy explained

Wood’s investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology and robotics.

Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values.

Investment research firm Morningstar criticized Wood and her ETFs last year.

Investing in young companies with slim earnings “demands forecasting talent, which Ark Investment Management lacks,” wrote Morningstar analyst Robby Greengold. “Results range from tremendous to horrendous.”

The potential of Wood’s five high-tech platforms listed above is “compelling,” he said. “But the firm’s ability to spot winners and manage their myriad risks is less so. … It has not proved it is worth the risks it takes.”

Some analysts say that things might change as Donald Trump returns to the U.S. presidency.

Todd Sohn, ETF and technical strategist at Strategas Securities, noted that since Trump's reelection in November, Ark Innovation ETF and Ark Next Generation Internet ETF (ARKW) have seen significant gains.

Since Nov. 5 the two ETFs have returned 30% and 36%, respectively.

"We still strongly believe that ARKW is about as good a proxy for Trump 2.0 as one might find, with heavy exposure to bitcoin, crypto derivatives, Tesla and defense," Cohn told MarketWatch.

Wood recently expressed optimism about a shift to looser regulation under Trump’s presidency.

“What the new administration is doing is changing fear with optimism,” Wood told Bloomberg on Jan. 22. It’s “highly underestimated how important deregulation is going to be to unleashing animal spirits. We are pretty excited about this.”

Not all investors echo Wood's confidence. Over the past year, Ark Innovation ETF has seen a net outflow of nearly $3 billion, with $32 million exiting the fund in the past month, according to ETF research firm VettaFi.

Cathie Wood sold $21 million of UiPath stock

Wood unloaded UiPath Inc. (PATH) for three consecutive trading sessions.

On Feb. 11, Wood’s Ark funds sold 492,266 shares of UiPath. That followed her sales of 996,441 and 9,326 shares on Feb. 6 and 7, respectively.

That chunk of stock was valued at roughly $21 million in total.

UiPath is an enterprise automation and artificial intelligence software provider. The company went public in April 2021 at an initial public offering price of $56 and opened at $65.50 on its first trading day.

But now, the stock is trading at $13.98, down 80% since its market debut.

UiPath debuted during a period of sky-high valuations for tech stocks. And the company has struggled with profitability. It has not reported a full year of net income since it went public.

Meanwhile, the automation space is becoming more competitive, with players like Microsoft, Automation Anywhere, and Pegasystems all vying for market share, pressuring UiPath.

More 2025 stock market forecasts

Research company Gartner has warned that as many as 30% of generative AI projects could be abandoned by the end of 2025 due to poor data quality, inadequate risk controls, escalating costs, or unclear business value.

Wood first invested in UiPath in Q2 2021, shortly after the company’s IPO. She then doubled down on UiPath until Q3 2023, when she began selling shares.

UiPath is up 10% year-to-date. As of Feb. 11, it was the 14th largest holding in Ark Innovation ETF, accounting for some 2.17% of the portfolio, according to stockanalysis.com.