Cathie Wood Dumps Tesla Stock Ahead Of Q4 Earnings, Ark Invest Loads Up On Amazon

Cathie Wood, the renowned investor and CEO of Ark Invest, has made a significant move in the tech sector ahead of Tesla's Q4 earnings. Wood's Ark Invest funds sold off more than 393,000 shares of Tesla on Monday, worth around $98.2 million, based on the stock's closing price of $249.83. This sale was executed through several of Ark's ETFs, including ARK Innovation ETF (ARKK), ARK Next Generation Internet ETF (ARKW), and ARK Autonomous Technology & Robotics ETF (ARKQ). As of June 13, Tesla stock remains the top holding in ARK Investment, with a weight of 11.86% in ARKK, 8.48% in ARKW, and 15.44% in ARKQ.

Wood's decision to sell Tesla stock ahead of Q4 earnings can be attributed to several factors, which align with her investment strategy. First, Wood may have been rebalancing her portfolios, as Tesla's substantial year-to-date gain likely made its weight in the ETFs higher than she preferred. Second, Tesla stock had been on a 12-day winning streak before Wood's sell-off, with shares up around 130% in 2023. The stock was also trading well above its 200-day/40-week moving average, indicating it was extended. Wood may have seen this as an opportune time to take profits and re-evaluate the stock's valuation. Lastly, Tesla had a history of missing analyst revenue and EPS estimates, which could have made Wood cautious about the upcoming earnings report.

Despite selling Tesla stock, Wood's Ark Invest firm predicted in late April that Tesla would reach a $2,000 per share price in 2027. This long-term bullish outlook suggests that Wood's decision to sell was not a bearish signal but rather a tactical move to rebalance her portfolios and potentially buy back into the stock at a more attractive price.

In addition to selling Tesla stock, Ark Invest has been actively buying shares of Amazon. On Monday, January 29, 2025, Wood and Ark Invest purchased a total of 174,498 shares of Amazon stock worth nearly $28.1 million based on Monday's 161.02 closing price. The firm snagged another $7.15 million worth of Amazon shares on Tuesday. This purchase aligns with Wood's investment philosophy, which focuses on disruptive innovation and companies that are at the forefront of technological advancements. Amazon, under the leadership of Jeff Bezos and now Andy Jassy, has consistently demonstrated a commitment to innovation and growth, making it an attractive investment for Wood.

Amazon's business model and growth prospects appeal to Wood for several reasons. First, Amazon has established itself as the leading e-commerce platform, with a vast customer base and a strong brand. The company's continued investment in infrastructure, such as fulfillment centers and delivery networks, ensures that it can maintain its competitive edge in the market. Second, Amazon Web Services (AWS) is a significant driver of Amazon's growth and profitability. AWS has consistently outpaced its competitors in terms of market share and revenue growth, as more businesses migrate to the cloud. Third, Amazon has made significant investments in AI and machine learning, which are integral to its e-commerce platform, AWS, and other businesses. These technologies enable Amazon to provide personalized recommendations, improve search functionality, and enhance its overall customer experience. Lastly, Amazon has been expanding its presence in various markets, such as India, Southeast Asia, and the Middle East, which can drive future growth and increase Amazon's global footprint.

In conclusion, Cathie Wood's decision to sell Tesla stock ahead of Q4 earnings and her recent purchase of Amazon stock align with her investment philosophy, which focuses on disruptive innovation and long-term growth prospects. Wood's tactical move to sell Tesla stock was likely a rebalancing strategy, while her investment in Amazon reflects her bullish view on the company's potential to drive future growth and innovation in the e-commerce and cloud computing sectors.