Ark Invest has been uber-bullish on both Elon Musk and Tesla TSLA from the very beginning. The investment firm is convinced that Tesla is in the pole position to dominate in the coming era of self-driving cars and robotaxi fleets, a nonexistent industry Ark thinks will be worth up to $10 trillion by 2030.
The company's faith in Tesla is such that, in April, it released a new projection that Tesla will be trading at $2,000 per share by 2027, an increase of around ten times its current value. Even weak quarterly earnings and a consistently falling gross margin have not dampened Ark's Tesla bull thesis, seemingly because of its fixation with robotaxis.
Still, Ark has been shaving its Tesla holding over the past few months, even as the stock continues its volatile roller-coaster ride of regular ups and downs.
Related: How Cathie Wood's major stock moves have hit recent snags
In June, Ark's flagship Innovation ETF owned roughly 3.5 million Tesla shares, weighted at about 12.5% of the ETf's portfolio. As of Oct. 23, the fund's Tesla holding had fallen to 2.6 million shares, worth $549.8 million and weighted at only 8.9% of the ETF.
Falling further through the beginning of November, Ark Innovation's Tesla holding has been bumped from its number-one slot to the third-largest name in the fund. Its 2.6 million shares are worth less than $600 million.
Despite this, Cathie Wood, Ark's CEO and investment lead, remains very pleased with her Tesla holding.
When Ark buys and sells Tesla
"It goes through wild swings," she told Bloomberg.
When the stock is up a lot, specifically increasing relative to other stocks in a given fund, Wood said, "We will sell some and redeploy into stocks that have either been hit by some very short-term concern or have underperformed significantly relative to Tesla for some other reason."
On the flip side, Ark looks to snap up more shares in Tesla when the stock is struggling.
"But it's staying right up in the top two to three names of the portfolio because it is in the pole position for this opportunity," Wood said, referring again to robotaxis and autonomous driving.
Related: Cathie Wood reveals the truth behind Elon Musk's fruitless self-driving predictions
Near-term Tesla volatility
But a more immediate point of interest for Wood involves the much-anticipated Cybertruck, which will make its first deliveries later in November. Though she's excited about it, Wood noted plenty of near-term concern around the release of the vehicle as well.
"We know that next year, as they launch the Cybertruck, it's not going to be profitable," Wood said, referring to the scaling issues inherent to the production of the truck. "We are going to have to navigate through a volatile period. Whenever Tesla is setting up to do anything, there's usually a lot of controversy around it. So controversy around the Cybertruck, how well it will sell, or how complicated it will be to scale."
Musk himself that he doesn't expect the Cybertruck to be profitable until it can properly scale up, something that could take up to 18 months.
"I think a couple of things will happen," Wood said. "People, when they see the Cybertruck, I think people are going to get very excited about the next big leg for Tesla: the truck market."
Tesla shares, now up only 76% for the year, ticked slightly lower Monday.
Related: Cathie Wood's super bullish Tesla stance tested after latest earnings
Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.
