Cathie Wood’s Internet ETF Sells Some Tesla, Xilinx, Buys The Dip In Fastly

One of the top-performing ETFs of the year bought the dip in Fastly Thursday.



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What Happened: After pre-announcing third quarter earnings, Fastly Inc (NYSE: FSLY) saw shares drop 30% after-hours on Wednesday.

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That dip led to the opportunity for the Ark Next Generation Internet ETF (NYSE: ARKW) to take a stake in the company.

The Ark Next Generation Internet ETF, led by Cathie Wood, bought 304,300 shares of Fastly. This represents a current stake of $27.3 million, around 1% of the fund’s assets.

The fund also bought small amounts of Palantir Technologies (NYSE: PLTR) and Zoom Video Communications (NASDAQ: ZM) on Thursday.

The ETF sold part of its stake in Tesla Inc (NASDAQ: TSLA), which is its top holding.

The Next Generation Internet ETF is known for its bullish take on the electric vehicle maker, and the stock has been the ETF’s top holding

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Fastly Delivers a Harsh Lesson on Software’s Valuation Excesses

Software stocks have been among the best performers of 2020, juiced by revenue growth related to stay-at-home measures and lofty expectations for future gains. But a blowup at cloud provider Fastly Inc. served as a stark reminder of how some of those hopes may prove misguided.

Fastly plummeted as much as 31%, its worst session on record, after a revenue warning for the third quarter rebutted a growth narrative that had made the company the fifth-best performer in the Russell 1000 Index this year. While some of the weakness was related to geopolitical tensions and its exposure to TikTok owner ByteDance, Fastly also warned of reduced revenue from other customers.

Fastly’s slowdown highlights the precariousness of lofty software valuations. Massive share plunges are the price paid when these businesses fall short of perfection. Software stocks have been among the year’s leaders, with an S&P index of software makers up more

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