Tesla (NASDAQ:TSLA) stock is in full focus today following a $41 million sale by Cathie Wood’s Ark Invest. Yesterday, three of Wood’s exchange-traded funds (ETFs) reported selling shares of the electric vehicle (EV) company.
Which funds sold shares? The three funds are the Ark Innovation ETF (NYSEARCA:ARKK), the ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) and the ARK Next Generation Internet ETF (NYSEARCA:ARKW). The sales of TSLA stock were Cathie Wood’s first since Aug. 17.
Meanwhile, Ark did a fair amount of buying yesterday as well, increasing its stake in companies like Unity Software (NYSE:U) and UiPath (NYSE:PATH).
So, why exactly did Ark sell some of its position in TSLA stock?
Cathie Wood Sells $41 Million of TSLA Stock
It’s unlikely that Wood has lost conviction in Tesla. After the sale, Ark still owns 1.44 million shares of the company, which is still the third-largest position in the ARKK ETF out of 35 total. In addition, Wood has a $4,600 price target for Tesla by 2026.
Factoring for the 3-for-1 stock split that occurred earlier this year, Wood’s price target is adjusted to $1,533. Furthermore, in a bearish situation — for which Wood sets the probability to 25% — TSLA stock has a 2026 price target of $966. In a bullish situation, which also has a probability of 25%, her target is $1,933.
It appears that Wood is selling Tesla in favor of other companies that may provide greater return in the short term. Piper Sandler analyst Alexander Potter seems to think the same. Yesterday, Potter raised his price target to $360 from $344, but warned that short-term pain may be on the way. Factors that may hurt Tesla include shorter waiting times, rising interest rates, geopolitical tensions and weakness in China. The analyst also believes that Tesla may lower prices on its EVs at “some point in the next year.”
Potter believes that Tesla is trying to lower its backlog by boosting production. All in all, the company is “striving for higher production, shorter wait times, and lower prices.” The analyst adds that he increased his price target to account for the price hike in Tesla’s full self driving (FSD) software. The price hike should offset lower 2023 sales due to EV price cuts.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
