Cathie Wood Sells Tesla Stake: AI Bet or Sell-Off?

ARK Invest, led by Cathie Wood, recently sold 23,110 Tesla shares valued at approximately $11.2 million. This partial divestment, occurring after Tesla's pullback from record highs, has fueled discussions about the electric vehicle giant's current valuation and future prospects. Despite the sale, ARK Innovation ETF retains a significant stake, indicating this was likely a profit-taking maneuver rather than a fundamental shift in strategy.

Tesla continues to position itself as an AI platform, highlighting advancements in Full Self-Driving technology, robotaxis, and its Optimus humanoid robot. CEO Elon Musk emphasized these long-term drivers during the third quarter earnings call. However, challenges persist in its core automotive business, with Q3 revenue rising 12% year-over-year to $28.1 billion, while vehicle deliveries saw a more modest 7.4% increase.

Intensifying competition, especially from lower-cost Chinese manufacturers, and ongoing price reductions have pressured Tesla's profit margins, leading to a 31% year-over-year drop in adjusted earnings per share for Q3. Nevertheless, the company maintains strong free cash flow of $4 billion and a substantial cash reserve of $41 billion to support its expansion plans.