Ark Invest CEO Cathie Wood’s Net Worth Slashed by 65%
Wood is doubling in, increasing her position in her firm and betting on tech companies like Tesla, Zoom, and Coinbase to eventually revive.
Cathie Wood became a cult hero in 2020 for a generation of investors bred on the belief that stocks only go up, but this year has been a harsh and bitter wake-up call for her Ark Invest and its devoted followers.
Wood, an early Elon Musk and Tesla disciple, masterfully guided Ark through the difficult early months of the epidemic, and her flagship Ark Innovation ETF surged 157 percent in 2020. When Musk became the world’s richest person in early 2021, following Tesla’s more than eightfold increase the previous year, Wood was riding high as a “disruptive innovation” champion, with investors pouring into her funds.
Ark’s problems began immediately after that. Large holdings such as Zoom, Roku, and Teladoc Health faltered in 2021 after benefiting from an overabundance of stay-at-home stocks in 2020, and the Ark Innovation ETF fell 23 percent last year, while the other rose 27 percent.
The bear market this year has been far worse, and Ark’s concentrated portfolio of tech equities is bearing the brunt of it. The Ark Innovation ETF has fallen 60% this year, approaching its March 2020 low, and the firm’s assets under management in all of its ETFs have fallen from more than $60 billion in February 2021 to $16 billion by the end of April.
Wood is sliding off Forbes’ list of America’s richest self-made women this year as a result of the asset downturn and stock drops for publicly traded asset managers such as T. Rowe Price and WisdomTree.
Her estimated net worth of $140 million is a significant decrease from $400 million last year and falls far short of the $215 million requirements for inclusion in this year’s top 100. According to Forbes, her primary ownership position in her company is worth around $125 million. The remainder is based on our estimates of her own wealth invested in Ark’s funds as well as independent cryptocurrency assets (she has forecast that bitcoin’s price would exceed $1 million by the end of the decade) and her own real estate.
Morningstar reduced the Ark Innovation ETF’s rating from neutral to negative at the end of March, citing weak risk management, a more concentrated portfolio, Wood’s dependence on intuition, and the firm’s apparent lack of succession planning for the 66-year-old Wood.
Ark secretly promoted two analysts to associate portfolio managers in late May, but Wood remains the firm’s CEO, chief investment officer, and public face.
She, on the other hand, is not backing down. “We remain optimistic about ARK’s long-term prospects and its potential to expand its strategy into new countries, industries, and business lines,” an Ark representative said in a statement. “Most importantly, Cathie Wood has increased her equity holding in ARK, demonstrating her confidence…
Along with ARK’s Founder and CEO, 97 percent of ARK workers recently expanded their personal ownership holdings in the company, demonstrating their trust in our opinion that ARK is on the right side of change and that our investors and we will be richly rewarded.”
“This might be individuals doubling down, hesitant to lock in their losses,” Greengold speculates. “I also believe there’s something to be said about Cathie Wood’s charm and her consistent presence in publicly available webinars, YouTube videos, and the media.” She appears to instill a lot of trust among regular investors.”
That has been the case for some time. The Ark Innovation ETF’s shares have fallen in value since the end of 2019, but the fund’s $7.9 billion in assets as of last Friday is significantly more than the $1.9 billion it had at the time, according to YCharts. Investors that bought into the excitement since 2020 and lost money riding it all the way down have contributed to the increased assets. Many people are giving her the time and faith she needs to make it back for them.
For the time being, she has a large enough war chest to be patient in the hopes of a reversal, with a wealth of about $150 million to her name. Her company produces a lot of money by collecting 0.75 percent yearly fees on its assets. It also collaborates with overseas issuers like Japan’s Nikko Asset Management to use Ark’s tactics for roughly $10 billion in non-discretionary assets.