Cathie Wood on why Ark is buying shares in Tesla Chinese rivals Nio, Xpeng


Popular stock selector Cathie Wood is interested in China’s electric vehicle shares Xpeng Inc XPEV and Nio Inc NIO because of their “low margin” feature, CnEVpost reported Tuesday, citing a Bloomberg TV interview.

What Happened: Tesla Inc TSLA bull Wood took a position in Nio last month, a first for the popular well-known investor who has built positions in Xpeng and is known for large exposure to Elon Musk-led Tesla Inc TSLA.

According to Wood, “high profit margins” are not a good thing, one reason her investment company has steered clear of such companies.

“So Xpeng and Nio, we have … but they have a very low margin,” the report quoted Wood as saying.

“It’s all about next-generation transportation in a world where you know that human-driven cars still have (a) very low percentage, compared to the eligible drivers. So that’s what we’re interested in.”

See also: Cathie Wood pulls $147 million from Tesla stake and takes position in rival EV maker

Why it matters: Nio reported a gross margin of 18.9% for fiscal year 2021, compared to 11.5% a year ago. Rival Xpeng, which aims to increase gross margin to 25% in the future, reported a gross margin of 12.5% ​​in 2021, compared to 4.6% a year ago.

In comparison, Tesla reported an overall automotive gross margin of 27% last year and 21% in 2020.

Ark Invest picked up 420,057 shares of Nio last month, which are valued at $10 million as of Monday’s closing price in EV stock. The investment firm owns 928,648 shares, worth $29 million.

Price action: Nio shares closed 8.7% higher Monday at $23.8 a share.

Photo Courtesy: Ark Invest

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