Cathie Wood’s Strategic Shift: Moving from Tesla to Archer Aviation
As the leader of Ark Invest, Cathie Wood is known for her bold investments in cutting-edge technologies and emerging companies set to challenge traditional markets.
In October, Wood sold over 280,000 shares of Tesla (NASDAQ: TSLA) through various Ark funds. Following this, she sold another 530,000 shares from November 1 to November 7.
These sales were strategically timed. Wood started reducing Ark’s Tesla position on October 24, right after the company released its third-quarter earnings report. During the last week of October, Tesla’s stock surged over 16%. Furthermore, from November 1 to November 7, Tesla shares soared by 19%. Since the earnings announcement on October 23, the stock has jumped nearly 38% as of November 7, which marks Wood’s last known sale.
Investing in Archer Aviation
Wood’s focus has shifted towards Archer Aviation (NYSE: ACHR), a company specializing in electric vertical take-off and landing (eVTOL) aircraft. While the concept might sound futuristic, these electric air taxis are designed to address real-world traffic issues, particularly in crowded urban areas.
During Archer’s Q3 earnings call, the company announced a partnership with Japan Airlines and Soracle, with plans to purchase up to 100 of Archer’s aircraft valued at $500 million, aimed at servicing some of Japan’s busiest cities.
In addition to working with airlines such as United Airlines and Southwest Airlines, Archer has also attracted interest from the U.S. military due to the aircraft’s quiet operation—ideal for stealth missions.
In late October, Wood acquired approximately 2.5 million shares of Archer stock. Considering Archer’s shares are priced under $5, compared to Tesla’s recent high valuation, Wood’s move may prove to be a wise investment.
Image source: Getty Images.
Long-Term Strategy Remains Key
It is evident Tesla has experienced significant stock growth recently. In uncertain markets, it can be smart for investors to lock in profits. Wood’s selling of Tesla shares comes in response to the stock’s rapid ascent, helping to rebalance Ark’s portfolio where Tesla is a substantial holding.
In a recent discussion, Wood indicated that Tesla’s momentum had made her holdings disproportionately large. As a savvy portfolio manager, she continuously reassesses her investments, reallocating profits into other ventures.
While Archer presents a tantalizing opportunity, the company is still in its early stages and has not yet generated revenue. Despite a promising order book exceeding $6 billion, the widespread use of eVTOL aircraft may still be years away. Wood’s transactions suggest she does not view Archer as a better investment than Tesla at this time.
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Adam Spatacco has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.
The views expressed in this article are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
