In the days and weeks leading up to Oct. 18, when electric vehicle leader Tesla (TSLA) -) is set to report third-quarter earnings, investors and analysts have noted a range of negativity and excitement as shares of the company have jumped and tumbled.
Morgan Stanley analyst Adam Jonas wrote in a note last week that investor sentiment is skewing "cautious," due largely to concerns over additional price cuts, which will continue to eat into Tesla's falling margins. If further roadblocks delay the full production and delivery of the coming Cybertruck, Jonas said, the price cuts are likely to continue.
Related: Cathie Wood says one prominent tech stock is a stronger long-term bet than Nvidia
The ongoing price war that Tesla seems so determined to win represents a trend that, to Wedbush analyst Dan Ives, cannot continue into 2024.
Jonas projected that Tesla's gross margin for the quarter will fall to the 17.5% range, down from the 24.3% the company boasted as recently as December 2022. Other analysts have predicted that should the price cuts continue, Tesla's margins could fall below 15%.
It seems that perhaps even Cathie Wood, a Tesla bull if ever there was one, is not opposed to benefiting from some upside before the likely volatility of the stock in the hours and days following its earnings report.
Ark Invest's flagship Innovation ETF sold 7,759 shares of Tesla Oct. 16, worth just shy of $2 million based on Tesla's closing price of $253.92.
Still, Wood is clearly eager to be in a strong position to see plenty of post-earnings lift; Tesla remains the fund's largest holding by a significant margin. Ark Innovation's 2.7 million shares, worth $682.3 million, are weighted at more than 10% of the fund.
Related: Why Tesla shares are faltering heading into Q3 earnings
Ark has trimmed its Tesla holdings by varying amounts over the past few weeks as Wood strives to maintain a holding that does not exceed much more than 10% of the fund.
Wood said Monday that she sees incredible upside value from Tesla over the next five years. Beyond her projection that Tesla will be trading at $2,000 per share by 2027, Wood predicted that, once it can scale autonomous driving, Tesla's gross margins will jump into the "60s and 70s."
Shares of Tesla, up around 106% for the year, fell slightly in pre-market trading.
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