Cathie Wood Sells Some Tesla Stock and Buys Some GM Shares
It may sound like sacrilege, but ARK Invest founder Cathie Wood sold some Tesla stock and bought some General Motors shares. It’s a bit of a surprise, but the devil is in the details.
ARK reported late Monday the sale of about 15,000 Tesla (ticker: TSLA) shares from its ARK Innovation ETF (ARKK). Tesla is still the largest position in the fund at roughly 9.5% of the total assets. The ETF has about $8 billion in assets.
General Motors (GM) stock isn’t in the innovation ETF. ARK bought about 158,000 GM shares worth about $6 million for the ARK Autonomous Technology & Robotics ETF (ARKQ). It looks to be the initial GM purchase for that fund.
The Autonomous Tech & Robotics ETF has about $1.2 billion in assets. GM makes up roughly 0.5% of the fund now. Tesla is also the largest position in ARKQ, accounting for about 9.7% of total assets.
The Tesla sale doesn’t feel all that significant. Small lots get bought and sold by ARK frequently. The GM buy, however, looks to be a win for the traditional auto maker. It’s an acknowledgement by a fund focused on technology and disruption that it is doing something right.
GM is investing in self-driving car technology. It owns autonomous technology company Cruise, which is rolling out a fleet of self-driving taxis slowly in some West Coast markets. Part of the technology from Cruise makes its way into GM’s passenger vehicle offerings. GM’s top-line driver assistance feature is named Super Cruise. It’s a level 2 self-driving system, meaning drivers need to keep their eyes on the road 100% of the time.
Tesla, of course, is investing heavily in self-driving cars too and is offering buyers its highest level driver assistance software, called Full Self Driving, for a monthly subscription or a one time fee of $12,000.
For now, FSD is also a Level 2 self-driving system. Wood believes FSD will eventually lead to truly self driving cars — -drivers won’t have to pay attention —which will enable Tesla to operate a fleet of autonomous taxis. The self-driving opportunity is a big part of the reason she believes Tesla stock will hit $4,600 by 2026.
ARK projects the Tesla robotaxi business would generate about $284 billion in sales and $151 billion in earnings before interest, taxes, depreciation and amortization, or Ebitda, in that year. Tesla, for context, is expected to generate sales of about $116 billion in 2023, mostly from selling cars.
Wood believes self-driving tech will be huge.
Write to Al Root at [email protected]