Cathie Wood’s Ark Invest exchange-traded funds (ETFs) have made significant adjustments to their holdings in Tesla Inc.’s stock, reducing their positions by over $25 million. These changes are part of a rebalancing effort that has resulted in Tesla remaining one of the largest holdings across the ETFs.
ARK Innovation ETF (ARKK) Sales
The ARK Innovation ETF (ARKK), known for its focus on “disruptive innovation” companies, recently disclosed that it sold 88,531 shares of Tesla on Wednesday. Based on Wednesday’s closing price of $261.16 per share, this amounts to $23.1 million in value. It is important to note that this marks the first sales of Tesla stock by the ARKK ETF in October. In September, the ETF sold 235,676 Tesla shares, valued at approximately $59 million based on the Sept. 29 closing price of $250.22.
Other ETF Sales
The ARK Autonomous Tech & Robotics ETF (ARKQ) sold 1,883 Tesla shares, worth just under $500,000. Additionally, the ARK Next Generation Internet ETF (ARKW) sold 7,185 shares with a value of $1.9 billion. Overall, the total value of Tesla shares sold by the ARK ETFs amounts to around $25.5 million.
Continuing Strong Presence in ARK ETFs
Despite the reduction in holdings, Tesla remains the largest holding in the ARK Innovation ETF, accounting for 11.3% of its weighting and having a market value of $757.6 million as of Thursday morning. Furthermore, it remains the largest holding in the ARK Autonomous Tech & Robotics ETF, representing 14.6% of its weighting. In the ARK Next Generation Internet ETF, Tesla is the fourth-largest holding with a weighting of 6.8%.
Importance of Maintaining Weighting
It is worth noting that investment funds often sell some shares of their largest holdings not necessarily to decrease their stakes in those holdings, but rather to maintain a certain weighting as stock prices rise. Therefore, the recent adjustments in Tesla stock by the ARK ETFs could be seen as a strategic move to balance their portfolios.
Tesla’s Performance and Concerns
Tesla’s stock has demonstrated mixed performance in recent months. It has gained 4.8% in October but experienced a 3.1% decline in September. Although the stock has more than doubled in value this year, it has corrected by over 11% since reaching its peak in July. This decline has been attributed to concerns over profitability and lower-than-expected deliveries amidst increased competition.
Overall ETF Performance
In contrast, the ARK Innovation ETF has seen significant growth, with a notable 23.9% increase, while the S&P 500 index has gained 11.1%. This further highlights the unique position of both Tesla and the ARK Innovation ETF within the market.
