Key Insights
- ARKK increased its bet on Tesla as the stock has been rapidly declining in recent days.
- Tesla is ARKK’s fifth largest holding.
- It remains to be seen whether the recent purchases will provide enough support to Tesla stock as ARKK’s performance has been extremely poor in 2022.
ARK Innovation ETF Keeps Buying Tesla As It Falls To Multi-Year Lows
According to Ark Invest, the Cathie Wood-led fund ARK Innovation ETF purchased more than 25,000 shares of Tesla on Tuesday, when the stock fell by 11%.
ARKK has been actively buying Tesla stock since December 16 and has accumulated more than 133,000 shares in recent days. Tesla stock is the fund’s fifth largest holding, behind Zoom, Exact Sciences, Roku, and Block.
This year has been unsuccessful for ARK Innovation ETF, which declined to lows that were last seen back in 2017. The fund has lost more than 80% of its value from the highs that were reached in early 2021. While Cathie Wood still attracts media attention, it is not clear whether investors are ready to follow her lead.
Tesla Investors Are Worried About Falling Demand For Company’s Cars
It remains to be seen whether Cathie Wood’s purchases will provide sustainable support to Tesla stock. Traders are worried that demand for Tesla cars will get hit by the weakening economy in 2023.
The price of used Tesla cars has already suffered a serious blow, which is a negative catalyst for the demand for new cars. The strong pullback in oil prices, which took place in the second half of this year, has made gasoline cars more attractive, which is also bearish for Tesla.
It looks that tax-loss selling has also played a role in the rapid decline of Tesla stock in recent weeks as traders rushed to take their losses for tax reasons ahead of the new year.
For a look at all of today’s economic events, check out our economic calendar.