Rocket Lab Trimmed From Cathie Wood's Space ETF: Strategy Or Signal?

Cathie Wood’s ARK Invest has become known for making big bets on the future through its ETFs—robotaxis, artificial intelligence, genomics, and, most notably, outer space. But this week, one of its most feted space bets, Rocket Lab USA Inc RKLB was discreetly trimmed from the ARK Space Exploration & Innovation ETF ARKX, making news in the investing community.

Rocket Lab is up around 800% in the past year. Track it now here.

ARKX unloaded around 64,326 shares of Rocket Lab, valued at more than $3 million, in Tuesday’s trade filings, according to TradingView. The transaction represents one of the ETF’s biggest space-focused divestitures in several months and is made despite the fund’s good quarterly showing and growing investor demand for aerospace innovation.

So, why did Rocket Lab, seemingly the star performer within ARKX’s portfolio, just get left behind?

Rocket Lab has been one of the more promising “new space” players for years, competing with Elon Musk‘s SpaceX based on smaller, more agile Electron rockets. Rocket Lab has established a niche in launching small satellites, and its ambitions have extended to reusability and even interplanetary flight. It was an easy choice for ARKX, which started trading in 2021 with the goal of riding space innovation.

But the recent selloff indicates that ARK is possibly reshuffling its space plan.

After all, execution has been bumpy, launch delays have cropped up, and competition is heating up. Don’t get me wrong, there’s no doubt Rocket Lab has vision. But ARK might be pivoting to companies with more consistent cash flow or stronger connections to the AI boom.

Also Read: Cathie Wood Buys The Nvidia Dip Amid Panic Over Stargate Project: Ark Swoops Up $2 Million Worth Of Hot AI Stock

Profit Taking Following Rocket Lab’s Meteoric Rise?

Another explanation: ARK is just securing gains.

Rocket Lab shares have been on a rocketing run, up an eye-popping 800% over the last 12 months, through July 22. That sort of gain would make even the most diamond-handed investor think about cashing out.

ARK has a reputation for being high-conviction but also opportunistic when reallocating capital on large run-ups. The company has done this previously, reducing positions such as Tesla TSLA or Coinbase COIN after significant gains, while still being long-term believers in the theme.

With ARKX’s recent acquisitions of AI giants such as Nvidia NVDA and defense-combined L3Harris LHX in mind, the fund may be shifting into areas with newer potential, while reaping gains from one of its largest recent winners.

The Bigger Picture: From Rockets To Data Centers

Apart from Nvidia and L3Harris, the fund added to its AMD AMD position, hinting at a thesis based on orbital infrastructure, defense technology, and AI convergence.

This shift aligns with the firm’s evolving thesis that the most significant opportunities lie in the intersection of aerospace and artificial intelligence, not just launching payloads but building the intelligence systems that process, transmit, and secure the data once it’s in orbit.

Brett Winton, ARK’s chief futurist, told CNBC: “We’re still singing the national anthem here. The investment in AI data centers is going to explode.”

Looking Ahead

Investors may see ARK’s pivot as a reflection of its evolving thesis: the next phase of growth in the space economy may rely less on launch capabilities and more on the digital infrastructure that supports space-based data, communication, and defense applications.

Whether Rocket Lab’s trimmed position represents short-term profit-taking or a longer-term strategic pivot, it underscores ARK’s active approach to thematic investing—navigating between visionary bets and tactical adjustments.

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