Cathie Wood Buys $19 Million In Tesla Stock As New ‘Major Worry’ Emerges

Topline

Ark Invest, the firm led by prominent stock picker Cathie Wood, bought up millions worth of Tesla during the electric vehicle maker’s worst daily dip in more than two years as Wood continues to double down on what initially brought her riches.

Key Facts

Wood’s flagship Ark Innovation ETF purchased 145,000 shares of Tesla, worth $15.7 million at the automaker’s $108.10 closing price Tuesday, while Ark’s Autonomous Technology & Robotics ETF nabbed a further 31,000 Tesla shares worth $3.4 million, according to daily transaction reports.

Those purchases came during Tesla’s 12.2% drop Tuesday, its largest single-day decline since September 2020, with the stock now down nearly 75% since November 2021.

It’s been a similarly brutal stretch for the Ark Innovation ETF, which is down more than 80% from its 2021 peak and is hovering at its lowest level since mid-2017.

Tesla, whose decline last year was largely driven by the unpopular actions of its CEO Elon Musk, now faces a new “major worry” with the demand for its vehicles showing “heavy cracks”, especially in the crucial Chinese market, Wedbush analysts Dan Ives and John Katsingris wrote in a Wednesday note.

Key Background

Wood, who invests in companies engaging in “disruptive innovation,” made millions amid Tesla and other favorites’ surge in the early days of the pandemic, before a brutal 2022 selloff wiped away Ark’s gains. Ark owns about $487 million worth of Tesla, its fifth-largest holding, most of which in its signature ETF, which has added more than 300,000 shares of Tesla to its portfolio over the last month. Though an unfavorable macroeconomic environment and elevated interest rates dragged down the market as a whole, Tesla’s decline largely coincided with Musk’s purchase of Twitter, dedicating much of his time and financial resources to the social media company much to the ire of Wall Street. Wood has remained bullish during the downturn, predicting last month Tesla shares would reach $1,500 by 2027, representing a more than tenfold increase.

Crucial Quote

“This is a fork in the road year ahead for Tesla that will either lay the groundwork for its next chapter of growth OR continue its slide from the top of the perch with Musk leading the way downhill,” Ives and Katsingris wrote Wednesday.

Chief Critic

Long heralded for her eye for high-growth stocks, Wood gained some notable detractors amid Ark’s fall from grace, including hedge fund billionaire Daniel Loeb. The value-focused Loeb took to Twitter last month to accuse Wood of being little more than a meme trader, or as Loeb put it, a “stonk” holder, referencing Wood’s manifesto that argued against using long-accepted accounting and investing fundamentals to evaluate companies that Ark holds.

Further Reading

Hedge Fund Billionaire Loeb Slams ‘Stonk’ Picker Cathie Wood (Forbes)

Tesla And Apple Hit Multiyear Lows As Tech Onslaught Continues Into 2023 (Forbes)