The Ark Innovation ETF (ARKK) soared by more than 3% on Monday as investors waited for key earnings from its constituent companies. It ended the day at $127.73, which was 20% above the lowest level in March.
ARK bull run accelerated
The Ark Innovation ETF is one of the most popular hybrid funds in the United States. It is run by Cathie Wood, one of the top women leaders in Finance, according to a recent Barron’s feature. The fund invests in some of the fastest-growing companies that are gaining a substantial market share in their industries. As of Monday this week, the fund had more than $22.8 billion in assets.
Tesla, the electric-car manufacturer, is the top holding of the ARK Innovation fund. For years, Cathie has been a leading proponent of the electric car company. She believes that the stock will hit $3,000 in 2025, which is a substantial premium from the current level. The other top holdings in the fund are Teladoc Health, Roku, Square, Zillow, Zoom, Spotify, and Shopify, among others.
A closer look at these firms shows that they are growth stocks that are popular among traders. They are also disruptors. Teladoc is changing the telemedicine industry while Roku is disrupting the television sector. Square is a payment juggernaut, while Zillow’s fastest-growing segment is home flipping. Zoom is a leader in video communications, while Spotify and Shopify are leaders in audio and e-commerce, respectively.
Tesla earnings in focus
The Ark Innovation fund soared on Monday as the market waited for the latest Tesla earnings. Indeed, during the session, Tesla’s share price gained by 1.21%, pushing its market cap to more than $708 billion.
However, things changed during the after hours as the company published mixed quarterly results, pushing it lower by 2.47%. The company recorded a 74% revenue jump to $10.4 billion. Still, the year-on-year comparison is skewed considering that the company faced substantial challenges in the first quarter of 2020 amid the pandemic.
The company also generated a profit of $434 million, which is a substantial increase from the $16 million that is generated in the same quarter in 2020. Most of these profits came from its Bitcoin holdings. It sold 184,877 cars in the first quarter, more than double what it sold last year. Tesla attributed its success to its Chinese operations and the strong demand for its products.
While Tesla shares fell after its earnings, there is a possibility that they will bounce back as investors rush to buy the dips. Furthermore, its fundamentals are still intact. Demand for its products is rising, and the company has a substantial market share in the EV industry.
Looking ahead, ARKK ETF will be in the spotlight as other companies it owns release their reports. Some of those that will be in the spotlight are Zoom and Teladoc, which are viewed as Covid stocks. Besides, their businesses boomed during the pandemic.
Arkk ETF price analysis
The four-hour chart shows that the Arkk Innovation fund ETF has been rebounding. Indeed, it has gained in the past four consecutive days and is a few points below the important resistance at $129.83. The ETF has also formed an ascending triangle pattern and is slightly above the 25-day and 15-day moving averages (MA). Therefore, while the ETF is set to dip slightly on Tuesday, the overall outlook is bullish. In the near term, I suspect that it will break out above $130 as bulls attempt to retest its all-time high at $160.