Topline
Ark Invest, a New York City-based investment firm that Cathie Wood founded, sold a large stake in Tesla on Wednesday. This is part of a growing number of insiders who are cashing out shares this week to help the stock rebound from this year's poor performance.
Cathie Wood, a Wall Street money manager and legend, has said that the electric-vehicle business could be worth more than $1 trillion. Eli Warren for Forbes
The Key Facts
Ark's daily transaction reports show that three funds of the firm, including its flagship Ark Innovation ETF ETF, sold a total of 142,708 Tesla shares on Wednesday. This represents a stake of approximately $108 million, and adds to separate sales of $166 million since July. In an interview with Yahoo!, Wood highlighted Tesla's successes and set a $3,000 price target for shares. This is nearly 300% higher than the current level. Finance stated that the company's increasing market share means it is poised to reap the benefits of an almost 18-fold increase electric-vehicle-sales by 2025. Although they have risen about 6% in the past month, Tesla shares, which are priced at approximately $757.50, have fallen nearly 15% since January's all-time high. Wood isn’t the only notable Tesla investor to have sold off shares following the recent price rise. According to regulatory filings, three company officers, including two C-suite executives, made about $4 million in stock sales this week. Forbes reached out to Ark and Tesla for comment but they did not respond immediately.
Surprising Fact
Wood is clearly bullish about Tesla. However, Wall Street consensus doesn't seem to share the same optimism. Bloomberg data shows that Tesla shares are currently trading at $701 per share, which could mean shares could plummet by 8% in the coming year.
Important Background
Wood stated that Ark prefers to trade around Tesla’s extreme volatility, taking advantage low prices to purchase and selling when prices may take a beating. Wood stated last year that analysts who are anxious about Tesla stock stocks will take profits, knowing they will get another chance to purchase the stock at a lower price. Despite recent sales, Tesla still accounts for nearly 11% in Ark's flagship fund. It holds about 3.1million shares and is worth an astounding $2.3 billion. The fund also has large stakes in Coinbase and Zoom Video Communications. Ark also sold shares in chipmakers Nvidia, NXP Semiconductors and picked up stock in UiPath software, Zillow real estate website, and Etsy and JD.com ecommerce businesses on Wednesday.
Tangent
Ark, an investor who is heavily invested in technology stocks, led the rally of the stock market last year. This generated huge returns for tech-heavy investors. However, the threat of rising interest rate and accelerating economic growth have prompted a stock market rotation away from tech stocks to more value-leaning and cyclical segments of the market. Despite a nearly 90% increase in stock market volatility over the past year the ARK Innovation ETF has only risen 5%.
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Ark Invest's Cathie wood Hits Back at 'Big Short Investor': He Doesn’t Understand 'Explosive growth' in Tech (Forbes).
Cathie Wood beat Wall Street by betting on Tesla (Forbes).
