The ARK Innovation ETF (ARKK) experienced a sharp 7.77% plunge in pre-market trading on Monday, as its major holding Tesla faces mounting criticism and operational challenges. The decline comes amid growing skepticism about Cathie Wood's ambitious price targets for Tesla and concerns over the electric vehicle maker's recent performance.
Investors are reacting to Tesla's reported 13% year-over-year decline in deliveries for the first quarter of 2025, marking its lowest delivery figure since Q2 2022. This slump in sales, coupled with growing inventory and price cuts, has raised concerns about Tesla's growth trajectory and market position. Critics argue that Cathie Wood's price target of $2,600 for Tesla within five years is unrealistic, potentially leading to an improbable $10 trillion market cap.
The stark contrast between Wood's optimistic valuation and more conservative analyst predictions, which suggest Tesla's stock could fall to as low as $24, is creating uncertainty among investors. This skepticism is directly impacting ARKK's performance, given the ETF's significant exposure to Tesla stock. As a result, the fund is experiencing a substantial sell-off as market participants reassess the growth prospects of its key holdings.
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