Even though Tesla (NASDAQ:TSLA) is the most famous electric vehicle manufacturer in the U.S., this doesn’t mean the company is problem-free. Indeed, there may be valid reasons ARK Investment Management, whose CEO is Cathie Wood, sold shares of TSLA stock. It’s worthwhile for prospective investors to get the full story instead of jumping into a trade they might regret later.
Some investors might have ethical reasons for choosing not to invest in Tesla or buy one of the company’s vehicles. That’s understandable, but for this discussion, we’ll focus on Tesla’s operational issues and other topics. So, let’s delve into the details now, starting with a famous fund manager’s diminishing Tesla share stake.
How Much TSLA Stock Did Cathie Wood Sell?
Here’s the rundown. Reports suggest that ARK Investment Management sold 764,970 shares of TSLA stock in 2023’s third quarter. This represented a 15.79% decrease in the fund’s share position in Tesla.
The problem is that required filings don’t state why funds sell their stocks. It’s entirely possible that Wood was satisfied with the profits from her Tesla stock investment and simply chose to “take some chips off the table,” as they say.
Or, maybe she was in the red on her investment in TSLA stock and engaged in some year-end tax-loss harvesting. Who knows, really? Tesla’s growth in 2024 is what matters for retail investors. On that topic, at least one big-bank analyst seems to suggest that Tesla has a substantial revenue-growth opportunity.
Specifically, Goldman Sachs analyst Mark Delaney determined that Tesla’s Full Self-Driving (FSD) software is worth $1 billion to $3 billion in potential annual revenue. That’s an ambitious outlook, considering Tesla’s FSD is still in beta testing.
Delaney also feels that Tesla’s “software related revenue could be tens of billions of dollars per year by 2030 (mostly from FSD).” This remains to be seen, of course. Still, FSD software is an aspect of Tesla’s business model that investors should certainly monitor.
Is Tesla In a Low-Growth Period?
Now, I must report some potentially bad news about Tesla. Maybe this is something that Wood had previously suspected about Tesla.
Apparently, Tesla might be in a low-growth phase right now. At least, that’s one way to interpret an X (formerly known as Twitter) posting from Martin Viecha, head of investor relations at Tesla.
Viecha wrote that Tesla is “between two major growth waves: the first driven by 3/Y platform since 2017 and the next one that will be driven by the next gen vehicle.” Is Viecha suggesting that Tesla won’t grow as a company until the launch of the highly touted Cybertruck?
Hopefully, Viecha isn’t pinning his hopes on the Cybertruck as Tesla’s next major growth catalyst. Sure, the odd-looking electric pickup truck might be a blockbuster success. Yet, Goldman Sachs analysts and even Tesla CEO Elon Musk himself have already issued warnings about the Cybertruck’s likely production-output rate.
Deutsche Bank analyst Emmanuel Rosner didn’t mince words in his interpretation of Viecha’s assessment. “Tesla candidly admitted the company is now in an intermediate low-growth period,” Rosner succinctly stated.
Tesla Stock: Consider the Pros and Cons
Some folks might have ethical issues with Tesla, while others may follow Wood’s lead and sell some shares, but you have to make your own informed decisions about Tesla’s growth prospects in 2024.
There are many pros and cons to consider. Tesla could generate significant revenue from its FSD software, but there’s no guarantee of this. Also, Tesla might be in the midst of a low-growth period, and this doesn’t bode well for TSLA stock. Therefore, I advise caution and don’t currently recommend investing in Tesla stock now.
On the date of publication, David Moadel did not have (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.
