Cathie Wood’s ARK Invest sells $162 million worth Tesla stocks, days after predicting sharp upside

Cathie Wood’s ARK Invest sells $162 million worth Tesla stocks, days after predicting sharp upside

ARK Invest, the investment management company run by Cathie Wood, sold a large quantity of Tesla stocks owned by various ETFs that it runs last week. According to the ARK Trading desk — an update of the firm’s daily trades — ARK Invest sold shares of Tesla worth close to $162 million. The selling activity comes a week after ARK published a research note where the company predicted that Tesla’s share price could rally to touch $4,600 per share by 2026. Tesla shares are down 16% so far this year, now trading at $1,005 per share.

Last Thursday’s ARK Invest sold 67,544 Tesla shares from their Ark Innovation ETF (ARKK), this was 0.66% of the total ETF. Further, 14,169 shares of the company were sold from the Ark Autonomous Technology & Robotics ETF (ARKQ), which was 0.9% of the ETF, and 11,447 shares were sold from the Ark Next Generation Internet ETF (ARKW) on the same day. This was preceded by the sale of 67,884 Tesla shares from the ARKK ETF on Wednesday. The told sale quantity from various ETFs run by ARK invest stands at 1,61,044 equity shares. The total amount of the sale, based on Thursday’s closing price comes just shy of $162 million.

ARK expects Tesla stock to enter ludicrous mode

Earlier in the month, ARK Invest had published a research note where Tesla’s stock price was projected to hit $4,600 apiece by 2026. This is above the previous estimate of $3,000 by 2025. “Tesla’s prospective robotaxi business line is a key driver, contributing 60% of expected value and more than half of expected EBITDA in 2026. Across our simulation set, we expect electric vehicles to constitute 57% of the company’s revenue in 2026, albeit at substantially lower margins than robotaxi revenue,” the note said.

ARK, in their bull-case scenario, believes Tesla’s autonomous ride-hail revenue will be close to $486 million by 2026. Under such a scenario the target price has been further increased to $5,800 per share.

Tesla earnings at a glance

Tesla reported a consolidated GAAP revenue of $18.76 billion, up 81% from the previous year. The reported revenue was better than estimates pinned by Bank of America (BofA). “The slight revenue beat versus BofAe was largely attributable to the Services & Other and Automotive segments, while Energy Generation & Storage was a bit light. TSLA also reported $679mm in Regulatory Credit revenue, which was also above our $375mm estimate,” BofA said. Automotive Sales revenue stood at $16.19 billion. Earlier in April, Tesla had announced total deliveries of 3,10,048 vehicles during the quarter.

BofA analysts have a ‘Neutral’ rating on the stock with a price objective of $1,300 per share, based on 18x EV/Sales and 78x EV/EBITDA on their 2023 estimates.