Cathie Wood's Ark Invest Is Buying SpaceX Stock as Shares Sink Below Their IPO Price. Should Investors Follow Her in?
Key Points
Cathie Wood's Ark Invest ETFs bought nearly 230,000 shares of SpaceX on July 27 and 28.
The ARK Innovation ETF has lost 41% over the last five years, so Wood's picks don't always work out.
Even after its dip, SpaceX remains expensive, and the share price could decline further once the insider lockup period expires.
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Space Exploration Technologies (NASDAQ: SPCX) didn't have many good days in July, as its stock declined 31%. It ended the month at a share price of about $108, well below the $135 IPO price.
Cathie Wood, founder and CEO of Ark Invest, has been a vocal supporter of SpaceX, saying she thinks it "could become the most important company in history, and I mean in global history." With praise like that, it's probably no surprise that Wood is buying the dip on SpaceX, but retail investors may want to be more cautious.
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Ark Invest has been scooping up SpaceX
Across its various exchange-traded funds (ETFs), Ark Invest bought 229,651 shares of SpaceX on July 27 and 28. It also bought 68,145 shares of Tesla during the same time period, investing a total of $47.3 million in the two Musk-led companies.
SpaceX is a top holding of multiple Ark Invest ETFs, most notably its flagship fund, the ARK Innovation ETF (NYSEMKT: ARKK), which owned about $283 million in SpaceX stock as of July 31. The ARK Autonomous Technology & Robotics ETF (NYSEMKT: ARKQ) owned about $113 million.
Just because Cathie Wood and Ark Invest are buying a company doesn't mean you should do the same, especially considering the firm's mixed track record. The ARK Innovation ETF has done poorly lately, losing 41% of its value over the trailing five years. The S&P 500 has gained 70% over the same time period. The ARK Autonomous Technology & Robotics ETF has performed better, but with a trailing five-year return of 42%, it still loses to the S&P 500.
Is SpaceX a buy below its IPO price?
SpaceX was arguably overvalued at its IPO. At the time, it had a valuation of $1.77 trillion and traded at about 95 times its 2025 sales of $18.7 billion. When a stock is significantly overvalued, a dip isn't necessarily a buying opportunity.
The insider lockup period for SpaceX starts to expire on Aug. 6, 2026, with restrictions expiring in tranches through Dec. 8, 2026. On a positive note, insider shares hitting the market will increase SpaceX's float and likely reduce its volatility. But the lockup expiry will also generate selling pressure, as it stands to reason that insiders will want to take some profits.
If Wood is right and SpaceX becomes the most important company in global history, then the current price is a bargain. But Wood is known for extremely optimistic forecasts, especially for popular artificial intelligence stocks and cryptocurrencies.
For a more grounded estimate, Morningstar puts SpaceX's fair value at $63 per share. I'm unsure if it will drop that far -- having Musk as CEO seems to add a premium to a company's valuation. Still, I'm waiting to see a couple of earnings reports from SpaceX (the next is on Aug. 4) and to watch what happens as its lockup periods expire. It's an exciting company, but it's still too richly priced in my eyes.
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Lyle Daly has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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