Even as Cathie Wood Becomes More Bullish, Her ETF Keeps Selling Tesla Stock

Cathie Wood, the renowned investor, continues to offload shares of Tesla Inc. despite the stock’s recent rally. However, a closer look at her flagship ARK Innovation ETF reveals a growing bullishness toward the electric-vehicle (EV) giant.

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On Monday, the ARK Innovation ETF reported selling 13,040 Tesla shares, which were valued at approximately $5.6 million based on the day’s closing price. This marks a continuation of sales throughout December, with the ETF offloading 214,031 Tesla shares, collectively worth over $92 million. These sales occurred as Tesla’s stock surged by 24.8% month-to-date through Monday.

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Despite these reductions, Tesla remains the ETF’s largest holding by a significant margin. As of Monday’s close, the ETF owned 2,530,383 Tesla shares, valued at $1.09 billion. This accounts for a 16.13% weighting in the ETF's portfolio. Compared to the end of November, when the ETF held 2,744,414 shares valued at $947.3 million before Tesla’s December rally, this highlights a substantial increase in Tesla’s representation within the portfolio.

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Since the U.S. presidential election, when Tesla CEO Elon Musk notably backed Donald Trump, the ARK Innovation ETF has sold a total of 432,687 Tesla shares. At current prices, these shares would be worth $186.3 million. Prior to the election, the ETF held 2,963,070 Tesla shares, which were then valued at $745 million—significantly less than their current worth.

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Investment funds often adjust their holdings to prevent any single stock from dominating their portfolio, especially when the value of a particular stock rises sharply. In line with this practice, Wood’s ETF has been trimming its Tesla stake during the rally. However, the rising value of Tesla’s shares within the ETF indicates Wood’s increasing confidence in the company’s future.

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On Tuesday morning, Tesla’s stock climbed another 4.7%, building on a 2.3% gain from Monday. Even with these gains, Tesla’s stock remains 6.1% below its record closing price of $479.86 set on December 17. With the latest uptick, the ARK Innovation ETF’s Tesla stake would be valued at approximately $1.14 billion.

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Tesla significantly outpaces the ETF’s second-largest holding, Roku Inc., which has a 9.22% portfolio weighting and is valued at $626.8 million. The third-largest holding is Coinbase Global Inc., with an 8.3% weighting and a value of $574.8 million.

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Overall, the ARK Innovation ETF has gained 3.3% so far in December, contrasting with the S&P 500 index, which has slipped 0.5% during the same period. Over the past three months, the ETF has surged 26.3%, far outpacing the S&P 500’s 4.7% gain.

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Cathie Wood’s portfolio adjustments demonstrate a nuanced strategy. While she trims Tesla shares to rebalance the ETF, the rising value of the remaining Tesla stake underscores her confidence in the EV maker’s long-term potential. Tesla’s prominent position within the ETF reflects Wood’s belief in the company’s ability to maintain its leadership in the EV space and capitalize on growth opportunities in the years ahead.

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