Cathie Wood and her Ark Invest sold more than 80,000 TSLA shares last week as Tesla confirmed its Model 3 will likely no longer be eligible for the full tax credit under Inflation Reduction Act (IRA) at the beginning of 2024. Tesla stock advanced Monday.
Cathie Wood's Ark Investment Management sold 81,874 TSLA shares last week. On Friday, Wood unloaded 13,188 TSLA shares, according to the company's daily trade disclosure. On Wednesday, Ark Investment Management sold 37,268 TSLA shares and on Tuesday, Wood also sold 31,418 shares.
Wood's Tesla trades were done through the ARK Innovation ETF. The week prior, Cathie Wood sold $30 million in Tesla stock.
Meanwhile, as of Thursday morning, the EV giant has a banner on its website declaring there is a "strong likelihood" the IRA tax credit for its Model 3 vehicles will be reduced to $3,750 after Dec. 31. The Tesla Model 3 trims currently are eligible for the full $7,500 tax credit.
Tesla clarifies that pending federal guidance, the Model 3 will revert to the $3,750 tax credit. The company is also encouraging consumers to take advantage of the full tax credit while the vehicle is still eligible.
Tesla stock gained 1.1% to 253.88 Monday during market action. On Friday, TSLA dropped nearly 3% to 251.12. On the week, Tesla dropped 3.6%.
Model 3 And The IRA Tax Credit
The Biden administration said on March 31 that vehicles eligible for the full $7,500 tax credit must meet specific criteria for components manufactured in North America and critical minerals sourced in the U.S. or from specified countries.
Vehicles that meet only one of the critical mineral or battery component requirements are eligible for a $3,750 tax credit. At the time, the base rear-wheel drive Model 3, with its battery from China, did not qualify for the full tax credit.
In early June, Tesla got all Model 3 vehicle trims eligible for the full $7,500 tax credit. The model previously only qualified at the $3,750 level. Tesla has not disclosed how it brought the Model 3 into alignment with IRA requirements for the full tax credit.
However, a month later Tesla posted on its website declaring "reductions likely after Dec. 31."
The Internal Revenue Service (IRS) on June 6 confirmed the change on its site. The IRS currently maintains that all Model 3 and Model Y vehicles qualify for the $7,500 tax credit.
After Tesla made all Model 3 vehicles eligible for the $7,500 tax credit, Morgan Stanley Adam Jonas wrote the qualification change "implies that Tesla likely tweaked its supply chain to meet both requirements."
Cathie Wood: Tesla Stock
Tesla stock currently resides below a 278.98 buy point in a cup-with-handle base, according to MarketSmith. Aggressive investors could use the Oct. 10 high of 268.94 as an early entry.
Analysts maintain that the United Auto Workers strike against Ford, General Motors and Stellantis is good news for Tesla, a nonunion shop.
Cathie Wood began selling Tesla stock again in September after taking nearly a month off from touching her TSLA holdings. Wood has been locking in profit on Tesla stock since mid-June and the total number of shares sold since June 12, including last week's sales, amounts to more than one million.
Tesla stock ranks fourth in the 35-stock IBD Automaker industry group. The S&P 500 component has a 98 Composite Rating out of a best-possible 99. The Cathie Wood-backed stock has an 95 Relative Strength Rating and its EPS Rating is 93.
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