ARKK shed 66% in 2022, but made that up in 2023, and is only down 13% in 2024
On finance Twitter, FinTwit for short, Cathie Wood's ARK Innovation ETF (ARKK) gets a lot of flack, some of it rightfully so. It's not 2021 anymore; the high interest-rate environment coupled and less risk appetite is not very conducive to the growth stocks that ran rampant three years ago. ARKK did not prove very resilient during a 2022 bear market, in which the fund shed 66%. In 2023, ARKK made that up with a 67.6% recovery.
Per Morningstar, ARKK destroyed $7.1 billion in wealth, while its healthcare-focused ARK Genomic ETF destroyed $4.2 billion in wealth. Tesla (TSLA) and Roku (ROKU), the fund's top holdings that account for 25% of ARKK, are down 7.3% and 19% in 2024, respectively.
But the 2022 carnage may have done the majority of the damage to ARKK. Year-to-date, the fund is down 13%, and with 21.3% of the ETF's total available float sold short, there's ample opportunity for a short squeeze, should growth stocks experience a revival in the coming months.
Options traders continue to bet on the next leg lower. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly three ARKK puts for every call in the past two weeks. The 10-day put/call volume ratio ranks in the elevated 100th percentile of its annual range, meaning buyers have never shown a greater appetite for bearish bets during the past year.