Cathie Wood's Latest Investment Move

author: FutureCar Staff    

Ark Invest CEO Cathie Wood has been trimming holdings in Tesla and Shopify from the investment firm's various exchange-traded funds (ETFs). On Aug. 15, Ark Invest sold 1,884 shares of Tesla, followed by the sale of 182,314 shares of Shopify the next day.

Interestingly, the funds from these sales are being used to invest in an even more potentially explosive, high-risk growth stock.

On Aug. 16, Wood's company purchased approximately $16 million worth of Archer Aviation shares for its Ark Innovation ETF. Archer Aviation is a maker of flying vehicles, specifically electric vehicle takeoff and landing (eVTOL) aircraft, and its business is still in a pre-revenue state.

Wood's recent stock moves indicate that she is still broadly bullish on Tesla and Shopify. While she has sold shares of both companies, Tesla remains the largest stock holding in the Ark Innovation ETF, accounting for 10.1% of the total portfolio weight. Shopify accounts for approximately 9.6% of the total portfolio weight in the Ark Fintech Innovation ETF.

Tesla also holds a significant position in the Ark Next Generation Internet ETF, accounting for 6% of the total portfolio weight. Shopify is the 10th-largest holding in this ETF, with a 4.4% equity weight.

Although Ark Invest has sold Tesla and Shopify shares, the amounts are relatively small compared to the overall holdings. The sales were likely made to free up funds for other potential high-growth plays, such as Archer Aviation.

Archer Aviation went public in 2021 through a merger with a special purpose acquisition company (SPAC). While the stock has experienced some volatility since its debut, it has seen significant growth in 2023, with a year-to-date increase of approximately 220%.

Archer is a pioneering player in the field of flying electric vehicles, and Wood seems to believe it has the potential to be a long-term winner. Ark Invest has previously invested in Archer, and the recent purchase further demonstrates Wood's confidence in the company.

In its second-quarter report, Archer announced that it had secured $215 million in new investment funding from a group that included Ark Invest, Stellantis, Boeing, and United Airlines. This additional funding brings Archer's total funding to over $1.1 billion.

The urban air-mobility market is projected to be worth $29 billion annually in 2023 and over $1 trillion by 2040, according to estimates from Morgan Stanley. Archer aims to achieve FAA certification and begin commercial operations in 2025, and it has received confirmation from the regulatory agency that it is on track to meet this goal. The company's Midnight vehicle has already received the FAA special airworthiness certificate, allowing it to fly in limited settings and scenarios in U.S. airspace.

While there is promise in Archer's outlook, investors should consider the speculative nature of the company. Although Cathie Wood is known for investing in high-risk, high-reward growth plays, her investment in Archer Aviation is relatively small compared to Ark's flagship growth fund. Archer stock currently represents approximately 0.4% of the total stock holdings in the Ark Innovation ETF, with a value of around $26.1 million.

FutureCar Staff