Cathie Wood’s magic touch is being put to the test following Ark Investment Management’s decision to increase its stake in Tesla Inc.

Shares of the electronic carmaker fell as much as 2.7 per cent to US$776 in New York. Ark disclosed late Wednesday that its flagship exchange-traded fund and two others boosted their Tesla holdings.

Tesla has slumped about 10 per cent over the past two weeks, with the decline quickening its pace after the company announced that it added about US$1.5 billion in Bitcoin to its balance sheet on Feb. 8. While Tesla’s market cap shrunk during the recent slide, the cryptocurrency has surged about 30 per cent to a record high.

Wood has been among Tesla’s most ardent supporters, as well as one of 2020’s top stock pickers, while the company’s shares surged more than 700 per cent. She has also been a big advocate of Bitcoin.

Ark’s flagship ARK Innovation ETF (ARKK) bought 89,447 shares on Wednesday, representing about 0.25 per cent of the fund. Tesla is already the top holding in the ETF. In addition, ARK Autonomous Technology & Robotics ETF (ARKQ) and ARK Next Generation Internet ETF (ARKW) also bought shares. Ark officials did not immediately respond to a request for comment.

While Tesla’s stunning rally last year lifted the shares of many electric vehicle-related startups, helping some to grow their market capitalizations manifold in a matter of months, that trend has started to sputter. Analysts have pointed to a steady stream of incremental development from traditional carmakers that suggest that competition in the space is about to heat up.

“We believe the traditional auto stalwarts General Motors and Ford, followed by Volkswagen’s QuantumScape news, shows that the EV party has some more guests coming,” Wedbush analyst Daniel Ives said. “It’s no longer just Tesla, Nio, Xpeng and pure plays on the EV arms race but the traditional auto players from Europe and the U.S. joining the EV party.”