To The Moon

Summary sale / purchase by Ms Cathie Wood : Sold - 139,642 Tesla shares at $192.22 per share. Total sales proceeds - $26.84 Million. Bought - 268,928 Coinbase shares at $66.30 per share. Total purchase costs - $17.83 Million. Bought - 320,557 Block shares at $61.88 per share. Total purchase costs - $19.84 Million. Ark funds forked out additional $10.83 Million to complete above 2 purchases. A few things came to mind when I came across above news article.. The obvious question is “Why did Ms Cathie Wood sell $Tesla Motors(TSLA)$ and used the proceeds to fund additional purchase of $Coinbase Global, Inc.(COIN)$ and $Block(SQ)$ ? Before examining each reason under the microscope, I think it is worthwhile to take a look at $ARK Innovation ETF(ARKK)$ holdings. ARKK funds - Top 10 holdings As per Bloomberg’s 23 Mar 2023 data, above are the Top 10 stocks in ARKK funds. No guessing required. Tesla is ranked #1 and make up 10.65% funds’ holdings. Coinbase is ranked #4 in ARKK funds’ holdings at 7.51%. Block is ranked #5 in ARKK funds’ holdings at 6.24% What Is The Story With Ms Cathie Wood ? At the height of her “popularity”, much to the chagrin of other Wall Street veterans, she was hyper-active across all forms of media, indoctrinating whoever that chanced upon her. You named it, she’s on it. She believed or believes investing heavily in innovation stocks. That is the way to go because the intrinsic values these “breakthrough disruptors” (call it however you wish) stock will sky-rocket one day. I think it is fairly accurate to summarize her investment strategy as “value investing”. Just that her stocks picked are very radical & different from veterans; who picked stocks that have stood the test of time. I would say, her stock picks could even be considered “speculative”. Look at the #9 stock (Teledoc) in ARKK holdings, traced through its history to know what I mean. Why Did Ms Cathie Wood Sell Tesla Shares ? I could think of 2 possible reasons. (1) Lack Of Excess Funds ? To date, her stable of ARK funds have suffered a total of $2 Billion in losses from selling stocks during the market rout. Sidetrack : USB bank “only” paid $3.2 Billion for Credit Suisse. That should put into perspective the magnitude of Ark Funds losses really is. I am sure there is some “spare cash” lying around in the company’s coffer. Looking at her investment pattern (sell to buy); it is safe to assume that there isn’t much though. With 40 years of investment, she knows a thing or two about the importance of having idle-resources lying around for a “really” rainy day. Otherwise, she could have just load up more Coinbase and Block shares without the need to liquidate right ? (2) Tesla Not As “Valuable” As It Used To Be? a. Stock Price I know for a fact that Tesla’s stock price is no where near where it used to be; during the heady days of 2020, 2021 and early 2022. Gone were the days when (a) interest rate was non-existent and (b) US market awashed with excess liquidity, courtesy of Fed’s Quantitative Easing (QE) to ensure US market remains “buoyant” and does not collapse as a result of the pandemic sweeping across the world. In just 2 short years, Tesla has undergone 2 stock splits. Very unprecedent. I would say the first split was “successful” because there was no let up by “speculators” to drive stock price back up to a level before stock split. As a result of the split, mr musk’s net worth increased by 5 folds. Greed fueled the owner,CEO to scheme and exercise another split. Tesla’s stock price after the 2nd split was $300 per share. Compared with its 24 Mar 2023 closing price of $190.41; that’s a -36.53% loss in Value. New investors who invested in Tesla right after 2nd stock split should still be suffering massive paper loss. b. Ark’s Purchased Price Of Tesla vs Current Price. Ark's Funds purchase and sale timeline of Tesla shares Above is a timeline charting Ark’s purchase and sale of Tesla shares over 5 years (2019 to 2023). Did you notice that Ms Wood has sold Tesla more often than she had purchased them; especially in 2022. Is it possible that she has noticed the diminishing values in Tesla ? Is it possible that Ms Wood’s last purchase (Q4 2022) is actually a dollar cost average (DCA) attempt to overall reduce Ark’s unit price of Tesla shares? With Tesla’s stock price having gained an approx +28% (YTD) in 2023, perhaps Ms Cathie Wood feels that now is the time to take profit before US economy really slips into a recession ? Afterall, she has been “complaining” about the Federal’s interest hikes and its repercussion on the US economy, for the longest time. (c) Tesla EV’s Massive Discount Has Reduced Its Value ? 6 Jan 2023 23 Mar 2023 I think Tesla slashing of its EVs prices to maintain demand and engage in unfair competition (to stave off competitor EV makers); has damaged its value, in the process. Doing a simple calculation : Assume a Tesla’s EV profit is $10 before steep discount. By slashing its price by -50%, its profit is reduced by -50% to $5. This implies Tesla will need to sell twice as many EVs to maintain its Q4 2022 quarterly earnings. The ability to sell twice as many EVs in the facing of mounting competition is not guaranteed and not a sure-win. With a looming recession set to descend upon the US economy, things are definitely not looking up. As a result, Tesla has become “less” valuable. I feel strongly this is the main reason behind Ms Wood’s decision to sell Tesla and buy more Coinbase & Block shares. She believes that Coinbase and Block holds better value, comparatively speaking. Do you think Tesla is less valuable compared to Coinbase and Block ? Do you think it is time to exit Tesla and re-enter when share price vs P/E is more attractive ? Please give a “LIKe” for this post ok. Thanks. Your rating is very important to me ! @Tiger_chat @TigerStars @CaptainTiger @MillionaireTiger @Tiger_SG @TigerPM