Topline
Joining a slew of insiders cashing out of Tesla stock, Ark Invest CEO Cathie Wood has been selling off a growing number of the company's shares this month, choosing instead to splurge on recently plunging technology stocks that the famed Wall Street investor believes could rally again soon.
Key Facts
According to Ark's daily transaction reports, the firm's flagship Ark Innovation ETF sold another 41,457 shares of Tesla on Thursday, representing a stake worth about $31.4 million and adding to separate sales across Ark’s funds totaling $266 million this month based on closing stock prices.
Though Tesla remains Ark's biggest holding, it's also the stock Ark has sold the most in September, surpassing sales of Nintendo, Swiss pharmaceutical firm Roche Holding and software company Trade Desk, which total about $50 million apiece.
Instead, Ark has been plowing into New York-based automation company UiPath, spending more than $185 million on roughly 3.4 million shares this month after the robotics firm’s stock plunged 20% from an all-time high within weeks of its initial public offering in April.
The investment firm has also spent about $96.5 million and $80 million buying shares of streaming company Roku and Zoom Video Communications—two tech stocks that rallied last year at the height of pandemic uncertainty, but have since shed as much as 50% of their value.
Ark didn't respond to Forbes' request for comment, but on Tuesday, Wood told an audience of investors she believes the market will soon start rotating back toward growth and innovation stocks after favoring sectors hardest hit by the pandemic earlier this year.
Ark's other top buys this month include San Francisco cloud-computing firm PagerDuty, crypto exchange Coinbase and healthcare companies Pfizer, Invitae and Fate Therapeutics.
Surprising Fact
Though she's doubled-down on other tech investments in Robinhood, Workday and Zillow, Wood has actually been getting rid of big-tech stocks in September, trimming her stakes in Alphabet, Facebook and Amazon by as much as $24 million.
Tangent
Technology stocks led the market's rally last year, generating massive returns for tech-heavy investors like Ark. Starting this spring, however, accelerating economic growth and the threat of rising interest rates spurred a stock-market rotation away from growth stocks, like those in tech, to cyclical and value-leaning slices of the market (like energy and financials). Though they've climbed about 14% over the last month, shares of Tesla, priced at about $757, are down nearly 15% from an all-time high in January, and the Ark Innovation ETF is up only 5% since December after skyrocketing nearly 90% over the past year.
Key Background
Following a wave of selling last year, Wood said Ark likes to trade around Tesla's outsized volatility, taking advantage of low prices to buy, and selling when she believes prices could take a hit. "When we feel like analysts are hyperventilating about a stock—including Tesla—we naturally just take profits because we know we’re going to get another opportunity associated with controversy to buy the stock lower,” Wood told CNBC. Despite her recent Tesla sales, Wood last week said the stock's prices could skyrocket nearly 300% by 2025. Still, Ark isn't alone among notable investors recently cashing out of Tesla stock. Three company officers, including two c-suite executives, sold about $4 million worth in shares last week, according to regulatory filings.
Contra
Although Wood is notably bullish on Tesla, the consensus on Wall Street doesn't reflect the same lofty expectations. According to Bloomberg data, the average analyst price target for Tesla shares is $701, suggesting prices could fall 8% over the next year.
Further Reading
Cathie Wood's Ark Invest Sells $110 Million In Tesla Stock As Insiders Also Dump Shares (Forbes)
How Cathie Wood Beat Wall Street By Betting Tesla Is Worth More Than $1 Trillion (Forbes)
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September 17, 2021 at 09:49AM
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Cathie Wood’s Tesla Stock Sales Hit $297 Million This Month—Here’s What She’s Buying Instead - Forbes
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