ARK Investment, an actively managed ETF, earns strong praise from its past performance. But blindly following speculative, momentum trades will prove costly for novice investors.
ARK started trimming its position in Tesla (NASDAQ:TSLA) stock despite pitching the $3,000 fair value before that. It bought Skillz (NYSE:SKLZ), Workhorse (NASDAQ:WKHS), and 3D Systems (NYSE:DDD), earning plenty of media attention.
Skillz has a 23.5% short float position that bears will likely profit on from here. Without the buying momentum helping it, SKLZ stock risks falling sharply.
Workhorse failed to win a contract with the U.S. Postal Service. A Senate investigation on why it lost the procurement might fuel speculation. Investors should assume that WKHS will continue falling as operating costs mount and deals fail to materialize.
Still, a small deal for Workhorse would validate its product and business model. Speculators could take a small position to bet on that.
In the 3D printing space, the SPAC hype for the sector and EV stocks sent 3D Systems to a $56.50 high. But when the Nasdaq corrected in Feb. 2021, DDD stock fell. The stock trades at a 60 times forward P/E. This rich premium will shrink as investors move on to the next fad.
