The Ark Innovation ETF (ARKK) stock price remains in a tight range even as technology companies flourish. The fund is trading at $124.8, bringing its year-to-date performance to -2.55%. In contrast, the Invesco QQQ fund that tracks the Nasdaq 100 index has jumped by more than 22%. QQQ is also trading at an all-time high.
Ark Innovation Fund underperformance
Ark Innovation Fund is the flagship platform for Cathie Wood, one of the most outspoken women in Wall Street. The fund tracks some of the biggest and fast-growing companies in the United States. Its biggest holding is Tesla, the electric car company. Other big companies in the portfolio are Teladoc, Coinbase, Roku, Unity Software, Shopify, and Square.
A closer look at most of these firms shows a common theme. They are all fast-growing companies that are disrupting large industries. For example, Robinhood and Coinbase are relatively new companies that are changing the finance industry. Similarly, Roku is changing how people watch TV and how advertisers reach this large audience. Palantir Technologies is also disrupting the analytic and predictive business for military and commercial customers.
At the same time, most of these firms were among the top beneficiaries of the pandemic. For example, the Shopify stock price rocketed higher in 2020 as more people shopped online. Roku soared as more people stayed at home while Teladoc benefited from the growth of online health consultation.
Therefore, the ARKK stock price has struggled because investors have been transitioning from lockdown stocks to reopening stocks.
ARKK fund earnings spotlight
The ARKK stock was in the spotlight this week as several portfolio companies published their quarterly earnings. Early this week, Zoom Video, the eight-biggest holding, published strong quarterly results. Its revenue rose to more than $1 billion for the quarter while its net income rose to more than $316 million. While these results were better than expected, the stock dipped, pushing Cathie Wood to buy more shares.
The other ARKK portfolio company that published strong results was DocuSign. The company’s revenue rose by 50% year-over-year to more than $511 million. This happened as the company added more than 13,000 customers in the quarter. It now has more than 1 million customers.
The Ark Innovation Fund also owns a small stake in PagerDuty. This week, the stock surged after the company published its strong results. Its revenue rose to $67 million, while its loss narrowed to more than $29.8 million.
So, is the Ark Fund a buy or sell? ARKK is a highly controversial ETF. Besides, Cathie Wood is always making headlines about the stocks she is buying and selling. It is also a highly expensive fund that has an expense ratio of 0.75%. In contrast, a popular fund like QQQ has an expense ratio of below 0.20%. And, most companies in ARKK are also members of the QQQ.
ARKK stock price analysis
The daily chart shows that the fund has been in a tight range in the past few months. Along the way, it has formed a symmetrical triangle pattern. The shares are also slightly below the 23.6% Fibonacci retracement level and are stuck at the 25-day and 50-day moving averages. The Moving Average Convergence Divergence (MACD) has also moved close to the neutral level.
Therefore, the outlook of the fund is currently neutral. A move below the key resistance at $133 will be a bullish thing for the fund. A bearish outlook will be confirmed if the fund’s price declines below $113.