What happened
Cathie Wood's Ark Innovation ETF (ARKK -0.66%) is suffering another week of turbulent trading. The fund managed by Wood and her Ark Invest firm was down 6.8% from last week's market close ahead of the market opening on Friday, according to data from S&P Global Market Intelligence.
Bearish pressures continued to prompt big sell-offs for growth stocks in this week's trading, and one of Ark Innovation ETF's largest fund components saw a particularly disastrous week of trading. Teladoc Health (TDOC -1.71%) stock got absolutely crushed following its first-quarter earnings release, but it wasn't the only fund component to see big sell-offs this week.
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So what
Teladoc published its Q1 results after the market closed on April 27, and the report arrived with concerning news. The company announced a $6.6 billion goodwill impairment charge related to the $18.5 billion acquisition of Livongo, a fellow telehealth services provider, it initiated in 2020. Because of slowdown at the business and today's market generally assigning much lower valuations for growth stocks, Teladoc took a massive write-down.
While the company had indicated that a large goodwill impairment charge was coming, the actual amount was larger than most investors and analysts had anticipated. Additionally, the company cut its revenue guidance for this year from between $2.55 billion and $2.65 billion to between $2.4 billion and $2.5 billion. Teladoc stock is currently down roughly 42.5% from last week's market close and still stands as the eighth-largest overall holding in the Ark Innovation ETF by weight even after the dramatic sell-off.
Tesla, which is the largest holding in the Ark Innovation ETF, has also seen big sell-offs over the last week. The electric vehicle (EV) company's share price pulled back in conjunction with news that CEO Elon Musk's $44 billion offer to acquire Twitter has been accepted. Investors are worried Musk could become distracted from his duties at Tesla if he becomes significantly involved with Twitter and that he will wind up selling a substantial amount of the EV company's stock in order to fund the purchase. On the latter front, news hit after yesterday's market close that the CEO had sold roughly $4 billion worth of Tesla stock.
Now what
The kinds of growth stocks favored by Cathie Wood for the Ark Innovation ETF could be in for more bumpy trading due to recent earnings and economic news. Amazon published its first-quarter earnings results after the market close yesterday, delivering sales that fell short of the market's target and a loss per share that was much worse than anticipated.
The U.S. Department of Commerce also released data showing that gross domestic product had fallen 1.4% year over year in the fourth quarter. With inflation at its highest level in more than 40 years and the Federal Reserve having just started to raise interest rates in order to dampen the inflationary trend, the unexpected economic contraction is worrying news and could prompt investors to become even more risk averse.
