Cathie Wood Is Selling Tesla and Buying This Other EV Stock That’s Under $5. Should You Follow Her Lead?
As the CEO of Ark Invest, Cathie Wood has made a name for herself thanks to her strong conviction in exciting technologies and high-profile investments in emerging companies looking to disrupt the status quo.
Wood was an earlier supporter of electric vehicle (EV) manufacturer Tesla (NASDAQ: TSLA), often touting the prospects of autonomous driving and the role artificial intelligence (AI) could play in the company’s roadmap before it was fashionable. But recently, Wood has been reducing her stake in Tesla and reinvesting profits in another EV player, Archer Aviation (NYSE: ACHR), which is developing electric air taxis.
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Below, I’m going to break down Wood’s various moves and detail what’s really going on here. There’s a lot to digest and more than meets the eye with Wood’s swap for Archer. Let’s dig into the details.
In the month of October, Wood sold more than 280,000 shares of Tesla across the ARK Innovation, ARK Autonomous Technology & Robotics, and ARK Next Generation Internet exchange-traded funds (ETF). Wood followed these moves with selling another 530,000 shares between Nov. 1 and Nov. 7.
The timing of these sales is not necessarily coincidental. Wood began trimming Ark’s Tesla position on Oct. 24, the day after the company reported third-quarter results. During the last week of October, shares of Tesla gained more than 16%. Moreover, between Nov. 1 and Nov. 7, Tesla stock rocketed by 19%.
All told, since Tesla reported earnings on Oct. 23, the stock has gained roughly 38% as of Nov. 7 (the date of Wood’s last reported sale of Tesla stock).
Archer Aviation specializes in a niche pocket of the mobility realm called electric vertical take-off and landing (eVTOL) aircraft. While this may sound like something out of The Jetsons, EV air taxis actually have some pretty eye-opening use cases.
The most obvious application is to use Archer’s air taxis as an alternative mode of transportation in congested environments like cities. What’s exciting about this particular use case is the fact that congested urban environments are a worldwide issue.
During Archer’s Q3 earnings update, management shared with investors that the company signed an agreement with Japan Airlines and Soracle, which included an intent to purchase up to 100 of Archer’s aircraft with a value of $500 million “with the goal of bringing air taxi service to some of the most congested cities in Japan.”
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