Longtime SpaceX Investor Cathie Wood Made This Move on IPO Day. Should You Follow?

Cathie Wood, the founder of Ark Invest, is known for her support of Elon Musk's innovations and ambitions. Wood's biggest holding in the flagship Ark Innovation fund is Tesla, and SpaceX (NASDAQ: SPCX) is the top holding in the Ark Venture fund. Musk is the chief executive officer of both companies.

It's not surprising that Wood holds shares of Musk-led companies because her investment strategy involves getting in on innovators early -- before they accomplish major goals. Wood has spoken about the promise of robotaxis as a growth engine for Tesla. As for SpaceX, Ark wrote prior to its IPO: "The existing business segments, at their current trajectories, are plenty sufficient to justify a compelling investment case."

Wood's SpaceX holding, through the Ark Venture Fund, took place in the private market, as the company's valuation climbed from $350 billion in 2024 to the current valuation of more than $2.1 trillion. The stock began trading on June 12, after raising $75 billion in the world's biggest IPO on record.

So, now you might wonder: What move did Wood make on IPO day? Let's find out, and consider if you should follow.

Image source: Getty Images.

SpaceX lockup restrictions

First, it's important to note that Wood can't sell SpaceX shares immediately because she is restricted by a lockup period. During this period, early investors in the company aren't allowed to sell their shares. Often, lockup periods span the first 90 to 180 days after the IPO. The idea is to prevent a great number of shares from flooding the market in a short period of time as some of the company's first supporters lock in some gains.

SpaceX put into place a tiered lockup schedule so that early investors may sell a certain percentage of their shares at various intervals. The first comes after the second-quarter earnings report in late July.

So, it's clear that, on IPO day, Wood didn't sell her SpaceX shares. But she didn't remain inactive either. In fact, Wood took the opportunity to increase her investment in the industrial and technology player. She added the stock to four of her six actively managed exchange-traded funds (ETFs).

Here are the specific moves Cathie Wood made:

• Ark Innovation bought 1,690,839 shares of SpaceX. The stock now has a 3.2% weight in the fund.
• Ark Autonomous Technology bought 736,442 shares of SpaceX. It has a 4.5% weight in the fund.
• Ark Next Generation Internet bought 325,562 SpaceX shares. The stock accounts for 2.6% of the fund.
• Ark Space and Defense bought 538,341 SpaceX shares. That's for a 6.8% weighting.

The purchases potentially put SpaceX in the top 10 holdings of Ark Innovation and Ark Autonomous Technology, and in the top five holdings of Ark Space and Defense.

Cathie Wood's belief in SpaceX

Wood's moves may reassure investors for one particular reason. As mentioned, she's not authorized to sell her SpaceX shares yet, but on IPO day, she actually bought more SpaceX shares. These actions confirm Wood's belief in the SpaceX story -- and suggest that she still thinks it's a reasonable buy, even at the company's opening price of $150 per share. SpaceX priced at $135 and went on to deliver a gain of almost 20% in its first day of trading.

So, what does this mean for you as an investor? Should you follow Wood and buy SpaceX stock? This depends greatly on your comfort with risk and your investment strategy. If you're an aggressive investor who, like Wood, aims to get in early on innovations, and you aren't too worried about risk, you might pick up a few shares -- but it's important to remember that you don't have to rush to do so. It's very likely that SpaceX, like most stocks, won't climb in one straight line and will offer buying opportunities at various times.

If you're a cautious investor, however, you might be better off waiting a bit longer before buying to see to what degree SpaceX may monetize some of its investments.

Adria Cimino has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.