ZINGER KEY POINTS
Tesla is still the third largest holding of Ark's ARKK, having a 7.36% weighting in the flagship ETF.
The recent weakness in Tesla stock is blamed on investor worries about a huge Q1 deliveries miss.
Tesla, Inc. shares have been on a downward spiral this year amid worries about the EV giant potentially missing first-quarter delivery targets. Undeterred by the recent weakness, Cathie Wood‘s Ark Investment Management actively bought Tesla shares on Thursday.
Ark’s Pile-Up: Ark purchased a total of 216,682 Tesla shares across three of its actively managed exchange-traded funds on Thursday. The purchase, valued at $35.21 million based on Tesla’s closing price of $162.50, is broken down as follows:
Ark Innovation ETF (ARKK): 161,956 shares
ARK Autonomous Technology & Robotics ETF (ARKQ): 18,543 shares
Ark Next Generation Internet ETF (ARKW): 36,183 shares
Tesla Faces Headwinds
Tesla’s stock has been on a broader downtrend since late 2021, with the decline accelerating since mid-2023. This can be attributed to several factors:
EV market slowdown: The overall electric vehicle market is experiencing a slowdown.
Rising interest rates: Higher interest rates are generally negative for growth stocks like Tesla.
Strategic concerns: Investors are concerned about a lack of transparency in communication, the absence of a low-end vehicle in Tesla’s product lineup, and recent aggressive price cuts.
Analyst Downgrades and Short Positions
Adding to the pressure, Wall Street analysts are increasingly lowering their delivery estimates for Tesla in the first quarter, suggesting their initial forecasts might have been overly optimistic.
Furthermore, some prominent investors are taking a bearish stance. Longtime Tesla supporter and investor Kevin Paffrath recently announced shorting the stock, predicting a near-term drop to $148 or even $101. Additionally, Gary Black of Future Fund has significantly reduced his fund’s Tesla holdings.
Wood Remains Bullish: In contrast to the prevailing bearish sentiment, Wood maintains a largely bullish outlook on Tesla and its long-term potential. Tesla remains the third-largest holding in her flagship ARKK fund, accounting for 7.36% of its portfolio with a value of $574.88 million.
Other analysts, such as Wedbush’s Daniel Ives, also remain optimistic, pinning their hopes on advancements in AI technology to provide a boost to Tesla shares in the coming years.
Market Performance: Tesla closed Thursday’s session down 4.12% at $162.50, marking its lowest closing price since May 4, 2023. ARKK also lost 3.22%, closing at $48.74, according to Benzinga Pro data.
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