Cathie Wood is a big fan of all things Elon Musk. But even she can’t look past the turmoil at Twitter. Wood’s ARK Invest owns a small stake in Twitter. Since Musk bought the social media company in October 2022, ARK has slashed the value of its Twitter ownership by 47 percent, Wood told The Wall Street Journal last week.
However, that doesn’t mean Wood has lost faith in Twitter or Musk companies overall. She said ARK updates its internal valuations of private companies frequently and it doesn’t necessarily reflect a company’s true market value.
“I would love to get more stock at these price levels actually, but no one wants to let any go. So that tells you something,” Wood said.
“The write-down is not representative of our fundamental outlook and belief in the long-term return on investment we believe that it will have for our shareholders,” she said of Twitter.
ARK owns Twitter through the ARK Venture Fund, a $20 million fund launched in September 2022, a month before Musk finalized his $44 billion purchase of Twitter. The fund holds stakes in 13 other companies, including A.I. startup Anthropic and space tourism company Axiom.
Twitter has been struggling with sliding advertising revenue and rising competition since Musk’s takeover. Advertising sales are down roughly half and the company has negative cash flow, Musk said in a tweet on July 15.
Earlier this month, Meta (META) launched Threads, a direct rival, and quickly gained more than 100 million users in less than a week. It remains to be seen whether Threads can keep up its momentum. New data from data analytics company Similarweb this week showed the new platform’s active users have already fallen by half since its peak on July 7.
“We think they can coexist,” Wood said of Threads and Twitter. “I think Threads has lit the competitive fire or taken it up a notch and it will be good for Twitter. We also think that longer term, Elon and team are very serious that they’re going to turn this into an everything app.”
ARK’s flagship ARK Innovation ETF owns shares in Meta. The fund also owns a large stake in Musk’s Tesla.
Wood isn’t the most bearish investor on Twitter. Fidelity Investments, a Twitter shareholder, slashed the value of its Twitter ownership by two-thirds between October 2022 and April this year.
Fidelity owned a roughly $20 million stake in Twitter before Musk’s takeover (Musk didn’t acquire Fidelity’s shares.) One month after Musk bought the social media company, the investment firm marked down its Twitter ownership by 56 percent. And by April, that stake was worth only $6.55 million, according to a regulatory filing.