Tesla shares drop 3.27% as Ark Invest sells $30M stake in pre-market trading

Tesla shares fell 3.2724% in pre-market trading on December 30, 2025, amid renewed investor concerns over shifting capital allocations by influential fund manager Cathie Wood’s Ark Invest. The decline marked a sharp reversal in momentum for the electric vehicle maker, which had seen recent gains driven by optimism around its autonomous driving and AI initiatives.

The sell-off followed reports that Ark Invest offloaded $30 million in Tesla stock across three ETFs, trimming its stake in the automaker by 60,715 shares. The move aligns with Ark’s broader strategy to reallocate resources toward emerging sectors, including gene-editing (e.g., CRISPR Therapeutics) and autonomous mobility (e.g., WeRide). The firm simultaneously boosted exposure to companies like Pacific Biosciences and AeroVironment, signaling a pivot away from traditional tech and EV plays.

Analysts noted that Ark’s decision could amplify short-term volatility for Tesla, particularly as the fund’s prior bullish stance had historically supported the stock. While Tesla’s long-term growth narrative remains intact, the shift underscores growing skepticism about near-term profitability in the EV sector. The firm’s valuation, already stretched at a P/E ratio near 317, faces added pressure as investors reassess the balance between innovation and execution risks.

Further complicating the situation, Tesla faces rising competition from traditional automakers investing heavily in EV technology. Analysts from JPMorgan and Goldman Sachs have revised their price targets downward, citing challenges in scaling production and maintaining margins amid global supply chain disruptions. Meanwhile, demand for Tesla’s Cybertruck remains strong, but production delays and component shortages could slow its market impact.

Investors are closely watching Tesla’s upcoming earnings report for signs of progress in these areas. If the company can demonstrate stronger-than-expected revenue growth and improved gross margins, it could stabilize the stock and attract renewed interest from institutional buyers. However, any shortfall could lead to a broader sell-off in the EV sector.