(Bloomberg) -- Cathie Wood’s flagship exchange-traded fund plunged Friday in one of its worst drops since the height of the coronavirus selloff in March 2020.
The $21.5 billion Ark Innovation ETF (ARKK) tumbled as much as 10.3% before trading 7.1% lower at 11:42 a.m. in New York, adding to a three-day losing streak in which it had already slumped more than 13%. Its top holding Tesla Inc. slid 13%, while other large bets Roku Inc. and Square Inc. retreated about 12% and 10%, respectively.
Other Ark funds also fell heavily. The $9.3 billion Ark Genomic Revolution ETF (ARKG) lost more than 7% as data showed that it posted a record $251 million outflow on Wednesday -- the largest exit on record. The $7.2 billion Ark Next Generation Internet ETF (ARKW) dropped almost 9%.
Ark has been caught up in the broad tech selloff as rising bond yields make investors cautious about expensive parts of the stock market. The firm’s products had been on a red-hot run over the past year as Wood’s strategy of targeting disruptive innovation won a legion of fans, whose loyalty is now facing its first big test.
The Nasdaq 100 Index fell 1.1% on Friday after erasing an earlier gain. It was also heading for a fourth day of declines.
“It shows a shift in the willingness to take risk,” said Matt Maley, chief market strategist at Miller Tabak + Co. “With long-term rates making a higher-high this week, investors are re-thinking their risk tolerance.”
The $21.5 billion ARKK saw another $95 million exit on Wednesday, the latest day for which data is available. However, technical analysis suggests some of the funds including ARKK may have fallen too far, too fast. Its 14-day relative-strength index fell below 30 on Thursday, a level most analysts consider oversold.
Meanwhile, surging bets against ARKK have eased. Short interest in the ETF has edged lower to 4.7% of shares outstanding, down from a peak of 5% on Friday, according to IHS Markit data.
