ARK Invest's aggressive accumulation of SpaceX (NASDAQ:SPCX) shares has backfired in the short term, with the position showing an estimated paper loss of $1.09 million in Friday's premarket trading. The loss widened from approximately $599,000 at Thursday's close, according to calculations based on disclosed trade data.
On Wednesday, ARK acquired 122,807 SpaceX shares for a reported $16.7 million, at an estimated average price of $135.99 per share. However, SpaceX shares closed Thursday at $131.11, slipping further to about $127.15 in premarket activity. This marks the first time the stock has closed below its $135 IPO price since listing.
The setback is significant because ARK raised its stake even as a major supply risk looms. SpaceX now represents a 4.36% allocation in the ARK Innovation ETF (BATS:ARKK), surpassing Advanced Micro Devices (NASDAQ:AMD) at 4.11%. Circle Internet Group (NYSE:CRCL) makes up 3.48%. Combined, SpaceX and Circle account for 7.84% of ARKK—nearly double the fund's holding in AMD.
ARK's buying spree this week extended beyond SpaceX. The firm purchased 276,056 SpaceX shares on July 13 and 15, spending approximately $36.1 million. Total July purchases have reached 624,781 shares, valued at roughly $81.8 million. In a sector rotation, ARK also sold 9,742 AMD shares for $5.34 million while adding 220,012 Circle shares for $13.91 million. Additionally, ARK acquired 49,003 shares of Ionis Pharmaceuticals (NASDAQ:IONS) for $2.69 million.
Operational risk emerged as SpaceX's Starship launch was aborted following multiple engine failures at startup. CEO Elon Musk stated, "Most probable launch timing is early next week," according to Reuters. However, market supply poses a more immediate threat: roughly 911.5 million shares held by employees and early investors will become available for trading two days after SpaceX's first quarterly report, expected in early August. These shares have a current value of approximately $123 billion, exceeding the $86 billion already trading on Nasdaq.
Valuation concerns are also mounting. SpaceX trades at 49 times forecast revenue, compared with just 15 times for Tesla (NASDAQ:TSLA). Jay Hatfield of Infrastructure Capital Advisors commented, "We won't overweight it because they do have the lockup coming," as reported by Reuters.
As of 7:11 a.m. EDT, regular Nasdaq trading had not yet commenced, but premarket activity was heavy. Nasdaq futures dropped 2.2%, reflecting broad chip sector losses. Liquidity during premarket hours remains low, heightening the risk of sharp moves in either direction. Losses could accelerate if the launch attempt fails, tech declines deepen, or insiders begin selling. Conversely, a successful launch could boost sentiment.
Two key events will dominate the coming week. Starship's next attempt may influence initial sentiment, but the anticipated float expansion poses the greater portfolio risk for ARK and other SpaceX investors.
