Cathie Wood, known for her high-conviction ideas, has been steadily selling Tesla shares despite the stock’s record free cash flow nearing $4 billion. This contrasts with Ark Invest’s previous strategy of buying the post-earnings dip, acquiring 143,190 TSLA shares earlier in the year.

Tesla, an American EV and clean energy manufacturer, currently trades at around $467, with a YTD gain of 15.7% and a market cap of $1.5 trillion. However, its valuation metrics, such as a high P/E ratio, have led even long-time bulls like Cathie Wood to trim holdings.

Tesla’s latest earnings report showed mixed results, with EPS missing estimates but revenue exceeding expectations. The company’s operating expenses have surged, impacting margins, despite generating a record $4.8 billion in free cash flow.

A recent supply agreement with Samsung SDI worth $2.1 billion over three years aims to address Tesla’s production constraints in energy storage. Elon Musk’s plans for robotaxis without safety drivers and a next-gen Full Self-Driving model have garnered attention.

Despite ambitious growth prospects, Ark Invest’s trimming of Tesla shares indicates a cautious approach due to valuation concerns and choppy earnings. Analyst targets suggest a possible cooling off or sideways movement for TSLA in the near term.

The next earnings release in February could sway investor sentiment, with average EPS estimates indicating a rebound. Consensus positioning remains cautious, with an average price target suggesting a 19% downside from current levels for Tesla stock.

Read more at Yahoo Finance: Is Cathie Wood Jumping Ship on Tesla Stock?