The Ark Innovation Fund (ARKK) stock price has been in a major sell-off in the past few weeks. The fund is trading at $108, which is about 14% below its highest level this month. It has crashed by more than 32% from its highest level this month.
Portfolio companies struggle
The Ark Innovation fund is an ETF run by Cathy Wood, one of the most prominent women in Wall Street.
After recording a spectacular performance in 2020, the fund has had a difficult period this year as investors shift to recovery stocks.
While some of the fund’s portfolio companies like Tesla have done well, many others have lagged significantly.
Teladoc is the second-biggest company in Cathy Wood’s Arkk fund. The fund owns about 10 million shares that are currently worth more than $1.18 billion. Teladoc is a company that offers e-health services.
It is a market leader that acquired Livongo Health in an $18 billion deal. That deal has turned sour, considering that the combined market cap of the company is now about $17 billion.
In the past few months, Teladoc shares have slumped as investors have questioned the company’s growth model as more people turn to physical consultations. As shown below, it has crashed by more than 63% from its highest level this year.
Teladoc is not the only laggard in the ARKK portfolio. Zillow is another constituent stock that has performed poorly. The Ark Innovation Fund has reduced its stake in the company recently and taken a big loss. Still, it has a small stake worth about $50,000.
Zillow is the biggest real estate portal in the United States. The company owns some of the best-known real estate portals in the country, like Trulia and StreetEasy. The firm’s biggest challenge is that its iBuying program has failed spectacularly. Today, the company owns hundreds of homes in the country that it overpaid for.
As a result, it recently decided to exit the industry even as firms like Opendoor and Offerpad thrive. The chart below shows that the Zillow share price has collapsed by more than 73% from its highest point this year.
Zoom Video earnings
The ARKK fund owns a stake in Zoom Video with more than $960 million. This stock was one of the best performers in the fund in 2020 as more people and companies turned to virtual meetings. This year, the stock has crashed. Indeed, as the chart below shows, the stock has dropped by more than 58% from its all-time high.
Sadly, the situation will likely continue after the company published its earnings on Monday. It made revenue of more than $1 billion, which was 35% higher than in the same time last year. It expects to make more than $4 billion in annual revenue this year. But the stock crashed by more than 6% after it published its earnings since analysts expect its growth to slow.
There are other stocks in the Ark Innovation fund that have crashed. Spotify has dropped by more than 34% from the all-time high, while Uipath has dropped by more than 45%. Square has dropped by 25% while Twitter is off by more than 40%.
ARKK stock price forecast
The daily chart shows that the ARKK stock price has crashed recently. It remains sharply below its all-time high. Also, it has moved below the descending trendline shown in red. The stock has also dropped below the 23.6% Fibonacci retracement level. It has also fallen below the 25-day and 50-day moving averages. Therefore, there is a likelihood that the stock will continue falling as the short interest rise.
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