Cathie Wood’s ARK Innovation ETF outperformed most markets in 2020.
Alex Flynn/Bloomberg
Leading technology investor Cathie Wood said she would be willing to sell down her flagship fund’s large stake in Tesla next year if the stock reaches its $3,000 price target early, according to reports.
Cathie Wood, the chief executive of ARK Invest, was speaking virtually at the Morningstar Investor Conference Wednesday when she doubled down on Tesla, referencing its exposure to emerging technologies like artificial intelligence.
ARK’s flagship fund, the ARK Innovation ETF (ticker: ARKK), outperformed most markets in 2020, with total returns of 152% last year. But it is more than 5% down so far in 2021, amid pressure from rising interest rates on the type of high-growth, innovation-focused companies it invests in.
Meanwhile, shares in Tesla (TSLA), which is ARKK’s largest holding and makes up more than 11% of the $21 billion-plus fund, according to FactSet data, has risen a comparable 3% in 2021, and 7.8% over the past year. Tesla stock was up near 1% in U.S. premarket trading Thursday.
Wood has a five-year price target on Tesla stock of $3,000 and said at the conference “if nothing were to change in our outlook and we got to $3,000 next year, my guess is that we would be peeling out of it,” she said, according to Bloomberg.
Wood also pushed back against bears, who point to sky-high valuations—especially for technology companies—as evidence that the stock market is in a bubble.
“We are not in a bubble, that I know,” the fund manager said, according to Reuters. “But I do believe the market is beginning to understand how profound some of these platform opportunities are, and how sustained and rapid the growth rates are going to be.”
Wood was referencing emerging technologies like artificial intelligence, which has the potential to help companies like Tesla further disrupt the automotive industry with self-driving cars.
The head of ARK also said she expects the average price of electric vehicles (EVs) to be cheaper than gas-powered cars in the next year or so, fueling the popularity of EVs. Wood said that by 2025 she estimates an average EV will cost $18,000 compared with $25,000 to $26,000 for a gas-powered car, according to Bloomberg.
Write to Jack Denton at [email protected]
