Cathie Wood and her Ark Invest firm on Thursday loaded up on Archer Aviation stock and off-loaded a small portion of their Tesla holdings. Meanwhile, drone maker Archer Aviation received price target hikes Friday on a new defense partnership and capital raise.
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Cathie Wood’s ARKK Stock Picking Strategy Explained
Wood and Ark on Thursday sold 36,600 shares of Tesla stock worth $15.3 million, based on Thursday’s closing price of 418.10, according to daily trade updates from the firm. The 34,823 shares unloaded from the ARK Innovation ETF (ARKK) only represented 0.21% of the total ETF. The 1,777 shares off-loaded from the ARK Autonomous Technology & Robotics ETF (ARKQ) represented 0.078% of the fund.
A surging Tesla stock has become a much-bigger share of Ark Invest’s portfolio, spurring some sales to reduce overconcentration.
Meanwhile, Wood and Ark Invest purchased 5.08 million shares of Archer Aviation (ACHR) stock across the ARK Innovation ETF, ARK Autonomous Technology & Robotics ETF and the ARK Space Exploration & Innovation ETF (ARKX).
Drone maker Archer Aviation is producing electric vertical takeoff and landing (eVTOL) aircraft for urban environments, with the goal of creating a robust air taxi service.
In total, the Archer shares were worth about $36.43 million based on Thursday’s closing price of $7.17 per share. A bulk of the ACHR stock was purchased for ARKK, at 4.7 million shares.
Archer Defense Partnership, Funding Raise
Elsewhere Friday, Deutsche Bank and Canaccord raised their price targets on ACHR stock following a new defense development partnership.
Archer Aviation on Thursday announced it entered an exclusive agreement with Anduril Industries to jointly develop a next generation defense aircraft. Anduril specializes in AI, computer vision, sensors and optics for military capabilities.
For the first product, the companies are planning a hybrid-propulsion vertical-take-off-and-landing (VTOL) aircraft for a potential program of record with the Department of Defense.
A program of record is a formal acquisition program within the DOD that has been funded to fill a specific need.
Archer in the release noted that the project will be part of its new Archer Defense program, which will be led by Lockheed Martin (LMT) and Sikorsky veteran Joseph Pantalone.
Archer Aviation also announced it raised $430 million in equity to support the initiative and other general corporate purposes, bringing its total capital raised to nearly $2 billion. Strategic partners and investors Stellantis (STLA) and United Airlines (UAL) participated in the funding round. Wellington Management and Abu Dhabi investment holding company 2PointZero also participated as new institutional investors.
Deutsche Bank on Friday noted the new program will likely be multibillion dollar in nature, “significantly boosting Archer’s growth potential,” according to The Fly. The firm noted that the financial risk profile of Archer should be much lower. Military programs could be awarded as early as next year, which could pull forward revenue and profit. Deutsche Bank lifted its price target on ACHR stock by 4 to $15.
Canaccord also praised the new defense partnership and raised its price target on Archer Aviation to 11 from 8.50. Both firms kept buy ratings on the shares.
Archer Aviation, Tesla Stock
Archer Aviation shares jumped more than 12% to around 8 early Friday. ACHR stock through Thursday rallied 157% from its 2024 low in September. Archer has advanced about 17% this year.
Archer Aviation stock cleared a 5.46 buy point on Nov. 21, spiking to 9.84 on Nov. 29 before pulling back.
Tesla ticked edged higher Friday morning. Shares hit a record 429.30 on Thursday before closing down 1.6%, snapping a six-session win streak. TSLA stock on Thursday hit a record high of 429.30 before easing.
Shares of the electric carmaker have rallied 68% in 2024.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
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