The ARK Innovation ETF (ARKK) stock price is down 30% in 3 months. It still looks risky!

first_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. One of today’s most widely watched US ‘hot stocks’ is the ARK Innovation ETF (NYSE: ARKK). This exchange-traded fund has New York-listed shares that trade just like other stocks. Launched on 30 October 2014 and managed by Cathie Wood, the ARKK stock price has delivered blockbuster gains for shareholders, especially in 2020/21. But its runaway success has reversed recently, so is it time to back or bin Cathie Wood?The ARKK stock price explodes and then implodesARK Investment Management specialises in buying companies that display ‘disruptive innovation’. By their very nature, these businesses are modern, highly tech-enabled firms seeking to dethrone incumbent players. The ARK Innovation ETF is the group’s flagship fund, with net assets of $23.1bn at end-April. Typically, ARKK holds 35 to 55 stocks, heavily concentrated in the communication, healthcare, technology, and consumer-cyclical sectors. This ‘future focus’ has sent the ARKK stock price shooting skywards.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…From roughly five years ago (18 May 2016) to 19 February 2020, the ARKK stock price exploded from $18.31 to $60.37. That’s a near-230% surge, easily thrashing the S&P 500 index’s 64% gain. But as Covid-19 spread worldwide, the ETF’s shares plunged. On 18 March 2020, they had crashed to $34.69, collapsing by three-sevenths (42.5%) in a single month. That slashed the gain since May 2016 to below 90%. Ouch.ARKK goes nuts in 2020/21The recovery of the ARKK stock price since March 2020 has been a biblical comeback worthy of Lazarus. Today, the stock stands at $109.72, more than triple (+216%) its March 2020 low. $1,000 invested in ARKK at the low is now worth $316. Then again, the ARKK stock price went much higher earlier this year. On 12 February, it peaked at $156.58, but has since tumbled. Over the past three months, this hot stock has crashed by three-tenths (30%).Remarkably, investors buying ARKK on 18 May 2016 and selling at the February 2021 top would have made a 736% return in under five years. After recent weakness in the ARKK stock price, that return has been cut back to 499%. This still massively exceeds the S&P 500’s 105% gain over the same period.Three lessons for investorsFirst, like mythical Icarus, the highest-flying shares often fall fastest to earth. When financial gravity finally takes hold, yesterday’s stars frequently become today’s dogs. Likewise, when market bubbles burst, declines can be both sudden and dramatic. With inflation (rising prices) and interest rates seen going higher, the future ARKK stock price is unlikely to resemble its spectacular past.Second, the crazy performance of the ARKK stock price has been built on the back of highly concentrated bets on key companies and sectors. While such intensive investing can produce spectacular returns, it can also be disastrous when stock prices and liquidity nosedive.Third, almost all fund managers with meteoric performances eventually crash back to earth. It happen to Bill Miller at Legg Mason and to Neil Woodford in the UK. Even Warren Buffett’s Berkshire Hathaway has underperformed the S&P 500 in recent years. Hence, Cathie Wood might well become the latest in a long line of fund managers to be humbled by Mr Market’s fickleness.Finally, would I invest in ARKK at the current share price? No, because I’m an old-school value investor, so this go-go growth fund’s stock isn’t for me. The ARK Innovation ETF (ARKK) stock price is down 30% in 3 months. It still looks risky! Our 6 ‘Best Buys Now’ Sharescenter_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Cliff D’Arcy | Monday, 10th May, 2021 | More on: ARKK Simply click below to discover how you can take advantage of this. Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Cliff D’Arcylast_img read more

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