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Tesla stock falls from top spot in Cathie Wood’s flagship ARK ETF

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Yahoo Finance's Alexandra Semenova joins the Live show to discuss Cathie Wood's ARK Invest trimming its stake in Tesla stock.

Video Transcript

- Switching gears, Cathie Wood is hitting the brakes on Tesla as the EV maker fails-- excuse me, falls to the second spot in the Ark Innovation ETF, it's first fall from the top spot in nearly five years. Yahoo Finance's Alexandra Smirnova joins us with the details. And this took me by surprise because she has made it clear over the years, right? Tesla was 10% or 11% at one point. How did this happen?

ALEXANDRA EMENOVA: Yeah, that's right, Jared. Tesla has lost its top spot as the top holding in Ark Invest's flagship exchange traded fund. The company slipped down late last week following Roku and then briefly slipped to third place before Cathie Wood bought up $10 million worth of shares yesterday that bought it back to second place.

Very interesting given that Tesla has held this position for nearly five years as its top holding. Up until recently, Tesla has also been a relative outperformer for Ark as its other stock picks, you know, just saw a tremendous downturn. And it's been steadily trimming its stake in Tesla now for four consecutive quarters.

The value of Tesla that Ark owns now has shrunk by half since the beginning of the year. So I did reach out to Ark Invest, and I asked them to explain this. But they declined to comment.

- But at the same time, they declined to comment specifically, but you know, they're pretty-- they talk often, right? They're pretty transparent. Do we know why we-- do we have any clues as to why we've seen this slip amongst the top holdings?

ALEXANDRA EMENOVA: I mean, there's no doubt that Cathie is still a big Tesla bull. Last week when Tesla got booted off of the S&P 500's ESG index, she quickly came to its defense on Twitter and called it ridiculous. Last month, she raised her price target on Tesla to $4,600 by 2026.

So a big Tesla bull. So this certainly could be a matter of the mechanics of the daily trade activity. But it does raise the question, as we see Tesla-- as we see growing investor concerns about Elon Musk's acquisition of Twitter, it does raise the question about whether Cathie Wood is slightly less bullish, perhaps. And it certainly wouldn't mark the first time that she, you know, drastically changes her mind last month as she invested in General Motors after, you know, warning that the company could go bankrupt just a few months ago.

So she has a lot of explaining to do to investors. Sure, Cathie Wood is pretty transparent in terms of publishing her daily trade activity and research notes. But as the fun continues to fall, a lot of her moves have been really raising eyebrows among investors.

- Well, key line there I'm kind of honing in on is that Tesla has not fallen as much as the others. So if she's punting along in some of these disruption names that have been so beaten down, she might just see the opportunity for quick. And she is a trader and it is actively [INAUDIBLE]. So maybe that's what she's doing. But nevertheless, thank you for that, Alexandra Semenova.