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Cathie Wood Thanks Musk for Twitter Deal Despite Tesla...

Business Maverick

Business Maverick

Cathie Wood Thanks Musk for Twitter Deal Despite Tesla Stock Hit

Catherine Wood
By Bloomberg
26 Apr 2022 0

Cathie Wood, a long-time champion of Elon Musk’s Tesla Inc., thanked him for his purchase of Twitter Inc. -- a move he said would unleash the site’s “tremendous potential.”

But the takeover has been less supportive of Wood’s own tech-industry bets.

Shares of Tesla have dropped by 10% over the past two days as Musk plans to use stock in the electric-car maker as collateral for a loan financing the takeover. Tesla was the biggest holding in Wood’s Ark Innovation (ARKK) and Ark Next Generation Internet (ARKW) ETFs at the end of last week, making up 10.1% and 9.6% of their assets, respectively, according to data compiled by Bloomberg.

Wood also missed out on some of the gains from the Twitter acquisition after cutting ARKW’s stake in the social-media company from 5.3% of the fund at the end of last year to 1.7% by April 1, the last business day before Musk disclosed that he’d become Twitter’s biggest shareholder. ARKK had completely eliminated its Twitter holdings by mid-February.

When asked if Ark will now buy Twitter, a spokesperson said the company doesn’t comment on daily trades.

The firm’s innovation-themed funds have already been under pressure from rising interest rates, which have weighed on the valuations of growth stocks particularly hard. ARKK has fallen 45% this year, while ARKW has dropped 42%.

Wood had expressed concerns about Twitter earlier this year that are in in line with some of Musk’s, saying her firm’s confidence in the company “was nicked a bit as we saw some of the censorship issues and controversies.” She’s also said the platform’s advertising model may not be right.

In a statement announcing the deal Monday, Musk said “free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated.”

Wood retweeted the statement on the deal, saying simply: “Thank you.”

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