Cathie Wood Just Cut Her SpaceX Position. Is It Time to Sell?

Famed growth investor Cathie Wood has been a longtime fan of Elon Musk and Space Exploration Technologies (NASDAQ: SPCX). She gained renown for spotlighting Tesla before it exploded into the trillion-dollar company it is today, and her firm, Ark Invest, sold private access to SpaceX before it went public.

For the first time since SpaceX went public in June, Wood cut her position by roughly 55,000 shares. What does that mean for retail investors?

Why Cathie Wood loves SpaceX

Cathie Wood and her team have written many pages extolling SpaceX and its part in the "space economy," and they're bullish on the company's Starlink satellite broadband business. Starlink is the dominant industry player, and it's growing quickly. It's also the only SpaceX segment that's profitable.

Ark Invest's Cathie Wood. Image source: Getty Images.

The firm estimates that reusable rockets will create a $160 billion market opportunity, and it embraces the idea of putting data centers into space, which it says will be 25% less costly than on Earth. SpaceX's rocket-launching business is still unprofitable, but Ark envisions costs decreasing and revenue increasing over the next several years. SpaceX revenue increased 29% year over year in the second quarter.

In the second quarter, Starlink revenue increased 66% year over year, and operating income rose 79%. Subscriber count doubled to 12 million, and Starlink now has more than 11,000 satellites in space, about two-thirds of all satellites in space, and is powering broadband Internet across the world. It has signed deals with major airlines for in-flight web access, including American Airlines, Southwest Airlines, and Virgin Atlantic. It has contracts with the U.S. government for secure satellite services.

SpaceX's position in Ark Invest's ETFs

Ark Invest has positions in SpaceX in four of Wood's exchange-traded funds (ETFs) and its venture fund:

• Ark Disruptive Innovation ETF, 6.9%
• Ark Autonomous Tech & Robotics ETF, 9.1%
• Ark Next Generation Technology ETF, 4.4%
• Ark Space & Defense Innovation ETF, 11.8%
• Ark Venture Fund, 7.1%

On Oct. 6, Ark Invest sold 54,873 shares of SpaceX stock from the Next Generation Technology ETF, or 0.4% of its position. That's a tiny amount of what the ETF owns, and it doesn't indicate any decline in its confidence in SpaceX.

In general, when Ark Invest sells a stock like this, it's doing some reshuffling. It might need to rebalance the portfolio in response to stock movements, or it might need some cash for another opportunity.

SpaceX is one of Ark Invest's largest positions, and it's unlikely the fund manager will sell much of the stock, but I'd still keep an eye out for further sales.

A larger or repeated sale would be a different signal, particularly if it came alongside any slowdown at Starlink, which is still carrying the company’s profitability while rocket launches and the AI business lose money.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.