Cathie Wood and Ark Invest have become something of the poster child for Tesla TSLA Uber Bulls. Ark has been a prominent investor in the company for years; this year, the firm raised its price target to $2,000 per share by 2027, an increase of roughly 10 times the stock's current value.
The basis of this outlook, according to Ark, has to do with autonomous taxis and artificial intelligence. Ark has said that the currently flailing robotaxi industry will be bringing in around $10 trillion in revenue by 2030 — and the firm thinks Tesla is in the pole position to dominate that market.
Related: Cathie Wood has a blunt warning about Tesla's stock over the coming months
Still, Ark's holdings are telling a different story than that which Wood keeps selling. Ark's flagship Innovation ETF has sold roughly one million shares of Tesla over the past six months, bringing what was once the firm's top holding to its third-largest holding.
Ark Innovation in June owned roughly 3.5 million shares of Tesla, weighted at more than 12% of the fund. As of Nov. 14, the EF owns about 2.6 million shares of Tesla, worth less than $590 million and weighted at 8.5% of the fund.
Despite this, Wood's bullishness outwardly remains unchanged.
Speaking to CNBC Tuesday, she said that the autonomous taxi industry's biggest hurdle is the quantity and quality of usable training data. Cruise's recent issues are not a concern to Wood, as Tesla's data-gathering fleet is far larger than Cruise's, despite the fact that Tesla's self-driving remains stuck at a Level Two designation.
"Autonomous taxi platforms are the biggest AI project in the world and therefore we think Tesla is the biggest AI player," Wood said.
In defense of the firm's recent reduction in its Tesla holding, Wood reiterated that when Tesla shares move up relative to the firm's other holdings, Ark trims its holding and redeploys the profits into other companies.
"It was up about 150% relative to our other names, many of which had not moved," Wood said. "We will always recycle that way."
Wood said that Ark has not sold much Tesla since that point.
She added, however, that the trimming, at least in part, accounted for the macroeconomic concerns that CEO Elon Musk highlighted on Tesla's most recent earnings call.
"I will also say, listening to Elon on the last conference call, he's very concerned about the economy, as we are," Wood said.
She added that, so long as Ark is "right on this autonomous taxi opportunity," the firm's Tesla holding will remain in the top five in the fund.
Related: Tesla bulls say electric vehicle demand is soaring. Here's what's really happening
Electric Vehicles or robotaxis
While Ark's main thesis for Tesla involves dominance in the currently non-existent robotaxi market, Wood thinks that Tesla will also continue to dominate in the electric vehicle sector.
Part of this dominance has to do with a pullback in EVs across the rest of the industry. Both General Motors GM and Ford F have recently announced significant pullbacks in EV investments and delays in their production of coming EV lineups, all to protect profitability.
Wood said that these automakers, struggling to find a way to profitably produce EVs, are facing a catch-22: "They can't be profitable in this space unless they scale. It's a catch-22, and their shareholder base is very ICE-oriented and they want their profits now and they want their dividends now."
This move, to Wood, represents nothing but an opportunity for Tesla to continue to gain market share in the sector, an opinion that is shared by Deepwater's Gene Munster.
Munster said last week that if the mass transition to EVs doesn't take place for another 30 years, the pullback will have been the right approach. But if that transition happens within the next five to 10 years, these legacy automakers will have given "Tesla a greater lead," making it more "difficult for traditional carmakers to build a profitable EV business."
Tesla shares, which have been struggling since the company reported weaker-than-expected third-quarter results, have been gaining lately. The stock, up slightly more than 80% for the year, closed the previous session at $223.71 and lifted around 4% after market-open to $232 per share.
Related: One of Elon Musk's boldest Tesla promises is going in the opposite direction
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