We recently compiled a list of the ARK Invest Stock Portfolio: Top 10 Stock Picks for 2024.In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against ARK Invest’s top stock picks for 2024.
ARK Investment Management LLC, more commonly known as ARK Invest, is an American investment management firm headquartered in St. Petersburg, Florida, that oversees several actively managed ETFs. It was registered in 2014 by Catherine Wood, who is known for making big bets on disruptive technology like self-driving carse and genomics. The investment fund has around $6.7 billion in assets under management.
Wood’s flagship fund has faced pressures for the third straight year, with outflows at nearly $1.8 billion during the first six months of 2024, which was close to triple the outflows seen in 2023. Its closing price of $57.85 on November 11 was down 60% from the highs of early 2021. In a letter posted to investors in July, she acknowledged that the fund’s performance was challenged by certain stock picks and the overall macroeconomic environment, but added that ‘our conviction in and commitment to investing in disruptive innovation have not wavered’.
The ARK Invest CEO argued that the fund’s holdings were set to benefit once the Fed rate cuts begin and that she anticipates another period of strong returns, reminiscent of the gains witnessed during the initial days of the pandemic. In August this year, in the hope of buying the dip, Wood piled into several tech stocks whose shares had tumbled in the months prior. Since the announcement of interest rate cuts in September, ARK’s flagship ETF has grown 25%, with a major upward spike in the week running up to and following the presidential elections, which Donald Trump won on November 5.
In a post-election message released to investors, Wood likened the country’s current economic situation to the Reagan era in the early 1980s, when the interest rate and tax cuts resulted in robust economic growth, eventually helping the United States grow out of deficit and into a surplus in the Clinton era.
Cathie Wood predicts a bright future and has stated that Trump’s policies will ‘turbocharge’ the American economy more powerfully than the Reagan Revolution did. She expects the newly elected president to slash regulations and cut tax rates, as he did during his first term.
Trump during his election campaign vowed to reduce the corporate tax rate to 15%, after having already cut the rate from 35% to 21% in his presidency between 2017 and 2021. Having said that, Wood believes that businesses will put investments on hold until the promised cuts are delivered, which means the positive anticipated impact on the economy will be delayed.
We scanned the ARK Investment Management portfolio, as of September 30, 2024, and picked the top 10 stocks according to their stake value. The figures were sourced from the Insider Monkey Database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Stake Value as of Q3 2024: $1,200,562,888
Tesla, Inc. (NASDAQ:TSLA) is an American automotive and clean energy company, headquartered in Austin, Texas. It is a pioneer in the EV industry and has significantly contributed to the global shift toward sustainable transportation through its electric cars.
The company’s share price has surged 44% since Trump’s election victory, which has lifted Tesla back into the elite club of companies having a market cap of $1 trillion. The automotive company has added a full third in capitalization since Election Day, according to global business magazine, Fortune.
Tesla, Inc. (NASDAQ:TSLA)’s impressive performance during the third quarter of 2024, driven by strong growth in vehicle deliveries, has also raised investor optimism. Revenue in Q3 increased 8% year-over-year to reach a total of $25.18 billion, falling just shy of expectations of $25.37 billion. However, it beat earnings expectations, logging an EPS of 72 cents against forecasts of 58 cents.
Tesla, Inc. (NASDAQ:TSLA) experienced improved profit margins during the quarter, fueled by automotive regulatory credit revenue of $739 million. Automakers are mandated to obtain a certain amount of regulatory credits every year and often purchase them from companies like Tesla if they fail to meet the target themselves. Since it only manufactures electric vehicles, Tesla, Inc. (NASDAQ:TSLA) has excess credits.
During the earnings call, Elon Musk mentioned that he expects vehicle growth between 20% and 30% next year, due to the advent of autonomy and the lower cost of vehicles. He was also confident about Cybercab reaching volume production in 2026, aiming for at least 2 million units a year. Moreover, driverless ride-hailing services are planned for launch in California and Texas next year.
Tesla is the top pick from the ARK Invest portfolio, with investments valued at $1.2 billion, representing nearly 11% of ARK’s holdings.
Overall TSLA ranks 1st among the ARK Invest’s top Stock Picks for 2024. While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
