Cathie Wood Still Bullish on Tesla After Selling Shares

Ark Invest founder Cathie Wood has long been bullish on Tesla, though recent selloffs of the automaker’s shares have elicited some concerns from onlookers. Recently, however, Wood discussed her reasoning for selling shares, adding that she’s still deadset on Tesla’s long-term success and that the investment firm’s confidence in the company has even increased throughout the year.

Above: A Tesla logo on a Model 3 (Image: Image: Casey Murphy / EVANNEX).

Although Wood has sold off a significant number of Tesla shares in recent months, she reiterated her confidence in the stock in a Q&A session with Barron’s last week. Wood says the recent selloffs were simply due to portfolio management, adding that she still maintains a $2,000 price target on the automaker’s shares.

“Our confidence has increased since Tesla is cutting prices,” Wood told Barron’s. “It is one of the few auto manufacturers that can afford to do that, because it is riding down the cost curve of consumer electronic batteries. This is going to hurt the other manufacturers whose costs are much higher.”

At the time of writing, Tesla shares have surged about 116 percent year to date. With the recent growth, Wood explains, Tesla stock has reached over 10 percent of the Ark Invest portfolio. She goes on to explain that, upon reaching this point, the firm seeks to cut back its position in Tesla stock and redeploy it into other stocks.

Above: ARK's Cathie Wood: The market is starting to look to the other side of the rate hike cycle (Video: CNBC via YouTube).

Tesla currently has around 60 percent market share in the electric vehicle business, and the Model Y has become the world’s best-selling vehicle this year. Ark Invest predicts 60 million EVs to be sold globally by 2027, with Tesla remaining the dominant market leader during the same year.

Wood also considers Tesla to be an artificial intelligence stock, rather than just a car company. This is largely due to its Autopilot and Full Self-Driving (FSD) beta systems, the latter of which uses data from human drivers to help train its AI for a future of autonomy. Tesla CEO Elon Musk says he expects autonomous driving to support a future robotaxi business, which could generate high-level profit margins, not unlike those from software companies.

Still, Wood says she thinks Tesla remains in the “core position” to be the market leader in the future market of autonomous taxi platforms in the U.S., adding that she expects the company to price robotaxi services below Uber or Lyft. Autonomy has been the primary focus of Wood and Ark’s lofty predictions on Tesla, and she still expects the company to outperform others in this area.

“Tesla’s competitive advantage is the billions of miles of real-world driving data it has compiled, which are used to train models to teach the car how to adjust to rare situations,” she added during the interview. “No one has been able to do this because they don’t have anywhere near as much data.”

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