Is Cathie Wood’s ARKK stock a buy or sell amid the tech sell-off?

Cathie Wood’s Ark Innovation Fund (ARKK) stock price has plummeted as its unraveling continues. ARKK, one of the most-followed ETFs in the United States, has dropped by about 30% this year, making it one of the worst-performing in the world. In comparison, the Invesco QQQ stock price has dropped by about 15% this year. 

Cathie Wood is one of the best-known active money managers in the world. After having a spectacular performance in 2020, the ARKK stock price has unraveled as most stocks in the fund have dropped. The fund has dropped by about 55% from the all-time high. As a result, the assets in the platform have all collapsed to about $16 billion. 

The reason for the decline is clear. Most companies in the Ark Innovation Fund are tech firms that did well during the pandemic. Now, with the economy reopening, there are concerns about these companies’ growth. 

For example, Teladoc is the second-biggest company in ARKK after Tesla. The company is now valued at about $11 billion. This is an embarrassing outcome considering that the company paid about $16 billion to acquire Livongo Health. 

In total, most companies in the ArK Innovation Fund have crashed by more than 20% from their highest level in 2021. Therefore, analysts worry whether it makes sense to invest in the fund considering that it has an expense ratio of 0.75%. In contrast, Invesco QQQ that tracks a broad number of tech stocks has a ratio of 0.25%. 

ARKK stock price analysis

The daily chart shows that the Arkk stock price has been in a deep sell-off in the past few months. The stock has managed to crash below the 50-day and 200-day moving averages. The two have even formed a death cross pattern, when the two averages make a crossover. It has also dropped below the key level at $96, which was the lowest level on May 13th. 

Therefore, there is a likelihood that the Ark Innovation Fund will remain under pressure amid a hawkish Fed. If this happens, the next key support to watch will be at $50.

arkk stock