Cathie Wood's Ark adds 519,000 shares of newly public Roblox in latest tech bet

• Cathie Woods' Ark added 519,000 shares of Roblox to its Next Gen Internet ETF in a stake worth $36 million.
• Roblox began trading publicly on Wednesday after conducting a direct listing.
• The gaming platform surged in its trading debut and gained again on Thursday following Ark's announcement.
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Concerns over tech stocks' valuations and overenthusiasm in the IPO market haven't kept Cathie Wood's Ark Investment Management from its latest bet.

The firm's popular Ark Next Generation Internet exchange-traded fund - which trades under the ticker ARKW - bought 519,086 shares of Roblox, according to a holdings update published Wednesday. The stake makes up 0.51% of the ETF's holdings and had a market value of more than $36 million as of Wednesday's close.

The investment comes just after the gaming platform completed its direct listing on the New York Stock Exchange. Shares soared to $69.50 from $64.50 in their trading debut, lending the company a market cap of about $38 billion.

The purchase and post-debut momentum lifted Roblox even higher in early trading. Shares gained as much as 9.1%on Thursday. ARKW gained as much as 3.8%.

Direct listings allow companies to take their shares public without offering new shares for sale. Companies participating in direct listings don't raise any capital, but they also avoid the underwriting fees associated with traditional initial public offerings. The IPO alternative has gained popularity with tech stocks in recent years, with Slack, Spotify, and Palantir all going public through direct listings.

The week's price action has so far marked a welcome reprieve for Wood's products. Ark's tech-focused funds plummeted in recent weeks as rising Treasury yields led investors to balk at growth stocks' lofty valuations. The tech sector has bounced back somewhat as investors buy the dip, but the months-long rotation to value still presents a threat to the group.

Roblox's Thursday gains add credence to Ark's growing influence on investor flows. Workhorse, Palantir, and DraftKings have all rallied in recent sessions after Ark revealed purchases of the firms' shares.

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