Tesla (NASDAQ: TSLA) has many notable bullish analysts and firms that have been hardcore believers in the electric automaker’s surge toward legendary investment status. Yesterday, however, one of Tesla’s largest supporters, ARK Invest, dropped over 242,000 shares of the electric automaker’s stock following a few strong days on the market. The move seemed to be a strategy for more growth through another company, Coinbase, a publicly traded stock as of April 14th.
According to ARK’s Daily Trade Information, a publicly available email that can be obtained through the firm’s website, the firm decided to sell 242,755 shares of TSLA stock on April 14th, the day of the COIN IPO. 185,712 came from the ARKK – Innovation EFT, while 57,043 came from the ARKW – Next Generation Internet ETF. The value of the shares sold was around $718 million. Making room in its heavily concentrated TSLA portfolio, ARK purchased 749,205 shares of COIN yesterday, 147,081 going to the ARKW ETF, 512,535 in ARKK, and 89,589 to ARKF – Fintech Innovation.
Credit: ARK Invest
Tesla still remains the largest concentrated stock of the ARKK and ARKW ETFs, maintaining 10.93 and 10.85% of each ETF, respectively. The move has been made in the past by ARK to open up playability with other holdings, a move that is understandable in the grand scheme of investing. A portfolio should never be too heavily concentrated with a specific stock, and ARK has made these types of trades several times in the past to increase diversification.
Other firms that are heavily bullish on TSLA, like Baron Capital and Baillie Gifford, have also trimmed their holdings of the electric automaker’s stock in the past. Despite owning billions in TSLA stock, these funds ultimately made these decisions due to enforced stake reductions to eliminate excessive concentration within their portfolios. Baron commented on his firm’s move that occurred in March, where his fund sold 1.7 million of around 8 million shares.
“It became a very large percentage of some accounts,” Baron said. His personal fund remains untouched. “I happen to own 1,115,000 shares personally. I haven’t sold a single share, and I don’t expect to for ten years.”
COIN shares were up 11% in premarket Thursday morning and is currently trading at $336.38. The stock opened at $381 per share yesterday and went to as high as $429.54 before cooling off.
It should be mentioned that ARK’s sale of TSLA stock yesterday is not a change of heart by the firm. ARK recently revised its price target to $3,000 for 2025 based on Tesla’s Robotaxi fleet, Autonomous driving projects, and the expected growth of the in-house insurance initiative the automaker launched in 2019. “Last year, ARK estimated that in 2024 Tesla’s share price would hit $7,000 per share or $1,400 adjusted for its five for one stock split. Based on our updated research, we now estimate that it could approach $3,000 in 2025.”
Disclosure: Joey Klender is a TSLA Shareholder.