Explosive Growth Stock Bought by Cathie Wood

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【Summary】Cathie Wood, CEO of Ark Invest, has sold shares of Tesla and Shopify from the firm's ETFs, using the funds to invest in Archer Aviation, a maker of flying vehicles. Despite the sales, Wood remains bullish on Tesla and Shopify, with both companies still holding significant weight in Ark's portfolios. Archer Aviation, a pre-revenue eVTOL company, has seen its stock price surge this year, and Wood seems to view it as a long-term winner.

FutureCar Staff Aug 25, 2023 9:54 AM PT

Explosive Growth Stock Bought by Cathie Wood

Ark Invest CEO Cathie Wood has been trimming holdings in Tesla and Shopify from the investment firm's 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 Archer Aviation, a 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 is a maker of flying vehicles, specifically electric vehicle takeoff and landing (eVTOL) aircraft, and is currently in a pre-revenue state.

Despite the recent sales of Tesla and Shopify, it is clear that Wood still has confidence in both companies. Tesla remains the largest stock 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.

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, such as Archer Aviation. Wood appears to be increasingly excited about Archer Aviation and its potential.

Archer Aviation went public in 2021 through a merger with a special purpose acquisition company. Since its public debut, the company's stock has seen volatile swings but has been on an upward trend in 2023, with a roughly 220% increase year-to-date.

Archer is a pioneering player in flying electric vehicles and Wood believes it has the potential to be a long-term winner. Ark has previously invested in Archer and the company recently secured $215 million in new investment funding, bringing its 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. Archer aims to achieve FAA certification and begin commercial operations in 2025, with its Midnight vehicle already receiving 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, known for her high-risk, high-reward growth plays, has not made a significant bet on the company yet. Archer Aviation currently represents approximately 0.4% of Ark's flagship Ark Innovation ETF.