Cathie Wood's Recent Portfolio Moves

author: FutureCar Staff    

Ark Invest CEO Cathie Wood has been reducing her holdings in Tesla and Shopify from the investment firm's ETFs. On August 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 a potentially explosive and high-risk growth stock.

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

What do these recent stock moves by Wood say about Tesla, Shopify, and Archer Aviation?

Despite the sales, Wood still has confidence in Tesla and Shopify. Tesla remains the largest holding in Ark's flagship 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 represents 6% of the total portfolio weight in the Ark Next Generation Internet ETF, while Shopify accounts for 4.4% of the equity weight in the portfolio.

The sales of Tesla and Shopify by Ark amounted to $439,000 and $8.9 million, respectively, which is relatively small compared to the overall holdings. It is likely that these moves were made to free up funds for other potentially explosive investments, such as Archer Aviation.

So, why is Cathie Wood buying Archer Aviation stock?

Archer Aviation went public in 2021 through a merger with a special purpose acquisition company. Although 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 pioneer in the field of flying electric vehicles, and Wood believes it has the potential to be a long-term winner. This recent investment is not the first that Ark has made in the company.

In its second-quarter report, Archer announced that it had secured $215 million in new investment funding from various companies, including Ark, Stellantis, Boeing, and United Airlines. This funding brought the total investment in Archer 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 an estimate from Morgan Stanley. Archer aims to achieve FAA certification and begin commercial operations in 2025, and it has already received the FAA special airworthiness certificate for its Midnight vehicle.

While there is promise in Archer's potential, investors should remember that its outlook is highly speculative. Cathie Wood is known for investing in high-risk, high-reward growth plays, but her investment in Archer is still relatively small. Archer Aviation represents around 0.4% of Ark's flagship Ark Innovation ETF, with shares worth approximately $26.1 million.

FutureCar Staff