Cathie Wood Boosts Ark Exposure to Rocket Lab Amid Price Decline

Ark Investment Management’s flagship Ark Innovation ETF added roughly 705,000 shares of Rocket Lab Corporation (RKLB) over two consecutive trading days at a closing price of $63.81, valuing the purchase at about $44.5 million. The acquisition brings the total number of Rocket Lab shares bought by Ark funds in the past month to more than 1 million. Wood’s decision follows a sharp drop in the space-stock’s price, which fell about 58 % from its all-time closing high of $150.23 recorded on May 27.

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Rocket Lab remains a leading publicly traded launch provider, having secured more than 90 Electron launch contracts—the most in its history—and a recent U.S. Space Force contract for geostationary satellites, pushing its backlog to $2.3 billion. Second-quarter revenue reached a record $234 million, up 62 % year over year, yet the company posted a $49.2 million net loss for the quarter and generated negative free cash flow of $371 million over the past 12 months. On a trailing basis, the stock trades at roughly 48 times sales, far above the S&P 500’s average of about 3.8 times sales.

TheStreet

The Ark Innovation ETF posted a five-year annualized return of –7.60 % compared with the S&P 500’s 11.06 % over the same period. Over the most recent 12-month window, the fund experienced net outflows of approximately $1.82 billion, reflecting investor caution despite the fund’s prior strong returns in 2020 and a 13.29 % gain year-to-date as of early September.

TheStreet

While some analysts, such as Berenberg, initiated coverage of Rocket Lab with a “Buy” rating and an $83 price target, citing rapid growth in the space economy, other market participants remain skeptical. The high sales multiple and ongoing losses raise valuation concerns, especially given the broader outflow trend from Ark’s offerings.

TheStreet

Wood remains optimistic about artificial-intelligence-driven productivity gains and sees AI as a key profit driver for high-tech firms, a view she reiterated in a recent X post. Nonetheless, Rocket Lab’s profitability challenges, elevated valuation multiples, and the broader net-outflow environment suggest that investors will closely monitor the company’s ability to translate revenue growth into sustainable earnings.

TheStreet