One of Tesla’s biggest bulls is ARK Invest, led by Cathie Wood. The firm sold over 85,000 shares across two of its ETFs on Thursday, following the biggest day for the automaker in a decade on Wall Street, but it is not because it wants to take a profit.
Instead, it is so Tesla does not overconcentrate either of the ETFs, a move it makes frequently after big days for the company in the market.
In the ARKK ETF, the firm sold 77,513 Tesla shares on Thursday night, 0.363 percent of its holdings.
In the ARKQ ETF, 7,943 shares, or 0.2592 percent, were sold. The 85,456 shares equate to over $22.2 million in value for the firm, which was used to purchase other stocks.
Although ARK has a reputation for being bullish in a manner that some might say is even overly optimistic, some are still confused by the move. Schwab Network, for example, asked if it was a “mistake” to take some profits now as opposed to holding onto the shares.
ARK does not sell to take a profit, with as bullish as they are, it would go against their own thesis.
They sell to keep $TSLA from being overconcentrated in their ETFs.
— Joey Klender (@KlenderJoey) October 25, 2024
ARK would not take profits on Tesla now, considering its thesis for the stock, which is valued at $2,600 per share in 2029. This includes a $1,500 bear case and a $7,000 bull case.
If it was strictly about profitability, ARK would not sell any shares of Tesla and would only buy. However, it cannot let its ETFs be dominated and overly concentrated by Tesla shares, so it occasionally sells after it begins to make up too much of these funds.
Inversely, when Tesla stock is down, ARK loads up. After Tesla’s Q2 earnings call when the stock was trading at around $182 with an over 12 percent slide, ARK loaded up on about $5 million in shares.
Tesla is up once again today, trading at gains of over 2 percent at the time of publishing.
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