The Ark Funds ETFs have been hit hard in 2022 with growth stocks among the laggards as investors turned to value stocks. Many stockholders have begun to question high multiples attached to once favored high growth “innovative” companies. Further pressure could come for Ark Funds this week with earnings reports of several large components.
What Happened: Four of the top ten holdings of the flagship Ark Innovation ETF ARKK report earnings this week, which could put further pressure on the ETF and others that include the stocks.
Teladoc Health Inc TDOC is the second-largest holding in the ARK Innovation ETF, representing $716.5 million and 6.5% of assets. The company is also the fifth-largest component in the Ark Genomic Revolution ETF ARKG.
Teladoc reported quarterly earnings after market close Tuesday. The company reported $554.2 million in revenue, beating analysts’ estimates of $545.6 million, according to Benzinga Pro. Shares are up 1.07% to $66.00 in pre-market trading on Wednesday, holding above a 52-week low of $64.92.
Coinbase Global Inc COIN is the fourth-largest holding of ARKK representing $650.4 million and 6.3% of assets. Coinbase is also the largest holding in the Ark Next Generation Internet ETF ARKW representing 8.3% of assets.
Coinbase will report fourth quarter financial results after market close on Thursday, Feb. 24. Analysts see Coinbase having fourth quarter revenue of $1.91 billion. Coinbase reported revenue of $1.31 billion in the third quarter, missing estimates from analysts.
COIN shares were down 7% to $176.76 on Tuesday, versus a 52-week range of $162.20 to $429.54.
Exact Sciences Corp EXAS is the sixth-largest holding in the ARK Innovation ETF, representing $591.6 million and 5.3% of assets. Exact Sciences is also the number one holding in the Ark Genomic ETF, representing 9.3% of assets.
Exact Sciences reported quarterly revenue of $473.8 million, beating a street consensus estimate of $449.0 million, according to Benzinga Pro. Shares were down 0.92% to $73.45 at the close on Tuesday, versus a 52-week low of $66.80.
Block Inc SQ is the tenth-largest holding in ARKK representing $468.6 million and 4.2% of assets. Block is the ninth-largest holding in ARKW representing 4.0% of assets.
Block is set to report fourth quarter financial results after market close Thursday Feb. 24. Analysts estimate the company to report fourth quarter revenue of $4.04 billion. The company missed analysts’ estimates in each of the last two quarters, according to Benzinga Pro.
SQ shares were down 3.90% to $93.91 on Tuesday, hitting new 52-week lows versus a previous year range of $96.83 to $289.23.
Why It’s Important: The quarterly earnings reports from the four components come after a week that saw Roku Inc ROKU and DraftKings Inc DKNG, two large Ark Funds ETF favorites fall.
The four components represent 22.3% of assets in ARKK and two of the stocks are top holdings in other Ark Funds.
This represents a huge week for Ark Funds and could show more pressure on the once favored high-growth actively managed ETFs.
Price Action: ARKK is down 56% over the last year and has fallen over 31% in 2022.
ARKG is down 57% over the last year and down 26% in 2022.
ARKW is down over 54% in the last year and down 30% in 2022.
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