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Shares of Tesla (TSLA) fell 5.92% on Friday, after the company's invite-only Cybercab launch event left investors underwhelmed and federal safety regulators opened an audit query into the new robotaxi. Cathie Wood's ARK Innovation ETF (ARKK) slipped 1.06% the same day. Those two moves are more connected than they look. Not only is Tesla the fund's biggest position, but the second-biggest position, SpaceX (SPCX), answers to the same CEO. SpaceX fell 1.2% on Friday, too. Together, the two Elon Musk companies make up about 16% of a fund with 47 holdings.
ARK publishes the fund's holdings daily, and the file dated Friday, Sept. 4, shows how top-heavy the ARK Innovation ETF is. Tesla sits at 9.62% of assets, and SpaceX sits at 6.28%—about 16% combined. Stablecoin issuer Circle Internet Group is the No. 3 position at 6.06%, just behind SpaceX. The top 10 positions account for about half of the fund's $6.6 billion in assets.
The Musk pairing is different because two positions run by the same person can move on the same news, and owning both doesn’t spread risk like unrelated companies. However, the concentration hasn’t been an obvious edge lately. The fund gained about 15% over the past year, while the S&P 500 rose about 19%.
Thursday was supposed to be a milestone for Tesla. The company put its two-seat Cybercab robotaxi into service in Austin, Texas, but the launch event was invite-only, not streamed, and CEO Elon Musk didn’t appear. The event also gave no details on pricing, production pace, or deployment plans. Regulators moved the same day, opening an audit query into Tesla’s self-certification of the Cybercab as compliant with federal safety standards. Tesla’s stock had climbed 5.4% on Thursday ahead of the event but fell 5.92% by Friday’s close to about $354, leaving it 29% below its 52-week high.
For ARK Innovation, the effect was mostly a matter of weight. A position that makes up 9.62% of assets and falls 5.92% takes about 0.6 percentage points off the fund by itself. The fund fell 1.06% on Friday, meaning more than half of the decline came from Tesla alone. Tesla trades at about 155 times expected next-year earnings, a valuation that assumes Cybercab ramp-up is smooth.
SpaceX, the satellite internet and rocket company, went public on June 12 at $135 per share in the largest IPO on record. Second-quarter revenue came in at $7.8 billion, up 92% year-over-year from $4.1 billion. The connectivity segment, built around Starlink’s satellite internet service, produced $4.3 billion, more than the company’s other two segments combined. Revenue growth accelerated, rising about 15% year-over-year in the first quarter before the second quarter’s surge. However, SpaceX isn’t profitable yet. It lost $541 million in the second quarter, an improvement from a $1 billion loss a year earlier. Over the first six months of 2026, its net loss widened to $4.8 billion from $1.5 billion. Shares trade around $148, modestly above their offering price, putting SpaceX’s market value near $2 trillion—about 64 times sales at the second-quarter pace.
Ultimately, a fund with 47 holdings sounds diversified, but at the top, it isn’t. About 16% of the fund rides on one CEO’s two companies, both of which are among the most expensive stocks in the market. For investors who own ARK Innovation as a spread-out bet on innovation, the pairing at the top may deserve more attention than the fund’s 47 holdings suggest.
Source: The Motley Fool
