Cathie Wood-run Ark Invest has once again shown its confidence in Tesla, Inc. (TSLA) by increasing its stake in the company, despite the stock’s recent decline. Ark purchased 111,802 Tesla shares, valued at $24.47 million, through its Ark Innovation ETF (ARKK) and Ark Next Generation Internet ETF (ARKW). This comes just a day after Ark added 112,475 Tesla shares worth $25.56 million.
Tesla is a significant holding in Ark’s flagship exchange-traded fund, ARKK, with a weighting of 7.90%. It is also the top holding in the Ark Autonomous Technology & Robotics ETF (ARKQ) with an 11.98% weighting. In ARKW, Tesla holds the sixth-highest position with a 5.20% weighting.
This latest purchase brings Ark’s total Tesla stake to approximately $1.02 billion, as per its 13F filing with the SEC in October.
Despite Tesla’s impressive 101% surge in 2023, the stock has been under pressure lately. The company’s stock price declined by 11.91% in January amid a sell-off in the tech sector, particularly among mega-cap stocks. Additionally, a series of price cuts announced by Tesla last year have negatively impacted core auto margins, further weighing on the stock in the latter part of 2023.
The stock’s weakness has persisted into the new year, and investors have been discounting stable prices. Tesla’s recent price cut in China has also contributed to the downward pressure on the stock. To alleviate concerns, Tesla will need to deliver a strong fourth-quarter earnings report, which is due on January 24. Analysts are estimating earnings of 67 cents per share, down from $1.19 per share the previous year, with revenue expected to have slipped 4.70% to $23.17 billion. Investors will be particularly interested in the company’s core auto gross margin and its 2024 deliveries guidance.
Ark Invest’s continued investment in Tesla indicates its long-term belief in the company’s potential. Despite recent challenges, Tesla remains a leader in the electric vehicle market and is at the forefront of innovation in the autonomous technology and robotics sectors. As the industry continues to evolve, Ark’s confidence in Tesla’s ability to succeed remains unwavering.
Overall, Ark Invest’s decision to increase its stake in Tesla demonstrates its conviction in the company’s future prospects and its commitment to long-term investment strategies. As the market eagerly awaits Tesla’s upcoming earnings report, it remains to be seen whether the company can meet or exceed expectations and regain investor confidence.
