Despite staying bullish, Cathie Wood of ARK Invest sells Tesla shares — what’s the reason?

Core Viewpoint - Cathie Wood's ARK Invest sold a significant number of Tesla shares primarily for portfolio management reasons, not due to a loss of faith in the company's future potential [2][10]. Group 1: Tesla Share Sale - ARK Invest sold a total of 87,993 Tesla shares, valued at approximately $39.3 million, from the ARK Innovation ETF (ARKK) and the ARK Next Generation Internet ETF (ARKW) [2][3]. - Tesla remains the largest holding in both ARKK and ARKW, constituting over 10% of the total investments in these funds [3][9]. - The sale surprised many investors given Cathie Wood's historically bullish stance on Tesla [2][9]. Group 2: Future Outlook for Tesla - ARK Invest maintains a bullish outlook on Tesla, projecting a price target of $2,600 by 2029, indicating a potential increase of over 450% from current levels [3][4]. - The forecast suggests Tesla could achieve approximately 50% annual growth over the next four years [4][9]. - Analysts are divided on Tesla's prospects, with 12 Buy ratings, 12 Hold ratings, and 9 Sell ratings, while the average 12-month price target is $386.42, indicating a possible downside of 15.81% from the last traded price [7][8]. Group 3: Market Context and Strategy - Traditional analysts express concerns over declining car sales, with expectations that Tesla will sell fewer cars in 2025 compared to 2024 [5][9]. - ARK believes that Tesla's AI-trained robo-taxi service will unlock new earnings growth opportunities [5][9]. - The year 2026 is viewed as critical for Tesla, with investors closely monitoring the growth of its Cybercab robo-taxi business [7][9]. Group 4: ARK's Investment Strategy - Alongside the sale of Tesla shares, ARK Invest made new purchases, including 108,557 shares of Robinhood and 97,406 shares of Block, indicating a shift towards fintech [8][9]. - ARK also diversified its portfolio by acquiring shares in companies like Deere & Co, L3Harris Technologies, Schrödinger, and Rubrik, while reducing holdings in Teradyne, SoFi, Iridium Communications, and Ibotta [9].