Goodbye Growth: Tech And Small-Caps' Hard Fall
Mike Zaccardi, CFA, CMT | Apr 25, 2022 04:02AM ET
This article previously appeared at The technology companies and speculative small-cap stocks have suffered mightily. Money has fled the market’s unprofitable glamor companies and flocked to old-fashioned cash flow generators.
Just how bad has the drubbing been among formerly hot growth names? Look no further than Cathie Wood’s (NYSE:ARK Innovation ETF) (symbol: 57% .
The losses piled up starting early November 2021—arguably the peak for growth stocks and small-cap shares. ARK Innovation ETF fell more than 20% during 2021’s final two months.
After that significant late-year dip, the fund has slumped another compounding works, the fund must now soar some 200% just to get back to even.
The growth-stock part of the stock market is clearly in a bear market. Just how bad have some of the drops been among ARK Innovation’s biggest holdings? Brace yourself.
Morningstar is my favorite site for analyzing ETFs. I like to see what’s under the hood of popular funds. According to the Apr. 21 snapshot, Tesla (NASDAQ:TSLA) is ARK Innovation’s biggest position, with a nearly 11% weighting. The stock has performed spectacularly over the past year, up 40%. But among the fund’s largest holdings, that’s the only happy story.
Zoom Video (NASDAQ:ZM) is the second-biggest holding. That work-from-home story stock has fallen 69% over the past 12 months. Roku (NASDAQ:ROKU), ARK’s third-largest position, is down 72% from a year ago, while its fourth-largest holding—Teladoc Health (NYSE:TDOC)—is off 68%.
All these stocks were among the fund’s top 10 holdings a pour into the ARK Innovation ETF.
This is not intended to be another hit piece on Wood’s flagship fund. Rather, it illustrates the old cliché—that it isn’t a stock market, but a market of stocks.
Even as the broad U.S. market has held its own over the past year, many once-sexy stocks have been tossed into the dumpster.
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