Explosive Growth Stock Acquired by Cathie Wood

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【Summary】Cathie Wood's Ark Invest has sold Tesla and Shopify shares and bought Archer Aviation stock. Wood remains bullish on Tesla and Shopify, with both still holding significant weight in Ark's portfolios. The move to sell these stocks is likely to free up funds for other potential high-growth investments. Wood sees potential in Archer Aviation, a maker of flying electric vehicles, as the industry gains momentum.

FutureCar Staff Aug 25, 2023 5:02 PM PT

Explosive Growth Stock Acquired by Cathie Wood

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

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

On August 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 bullish on Tesla and Shopify. While she has sold shares of these companies, Tesla remains the largest stock holding in 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.

Ark's sales of Tesla and Shopify were relatively small compared to its overall holdings. The moves were likely made to free up funds for other potentially explosive plays. Wood appears to be increasingly excited about Archer Aviation.

Archer Aviation went public in 2021 through a merger with a special purpose acquisition company (SPAC). Its stock has seen some volatile swings since its debut but has experienced significant growth in 2023, with a 220% increase in share price year to date.

Archer is a pioneering player in flying electric vehicles, and Wood sees it as a long-term winner. Ark has previously invested in the company and, in the second quarter, Archer secured $215 million in new investment funding from Ark, Stellantis, Boeing, and United Airlines.

The urban air-mobility market is projected to be worth $29 billion annually in 2023 and over $1 trillion by 2040. Archer aims to achieve FAA certification and begin commercial operations in 2025, and its Midnight vehicle has already received the FAA special airworthiness certificate.

While there is promise in Archer's outlook, it is important to note that it is a highly speculative investment. Wood is known for her high-risk, high-reward growth plays but has not made a significant bet on Archer Aviation just yet.

Even after the recent purchases, Archer Aviation represents a relatively small portion of Ark's flagship growth fund. The Ark Innovation ETF currently holds Archer stock worth approximately $26.1 million, accounting for roughly 0.4% of the fund's total stock holdings.