If Tesla Hits $400, These 2 ETFs Will Turbocharge Your Returns

By Will Ashworth Published Nov 23, 9:29AM EST

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If Tesla Hits $400, These 2 ETFs Will Turbocharge Your Returns — © Courtesy of Tesla

The last time that Tesla (NASDAQ:TSLA | TSLA Price Prediction) stock hit $400 was over three years ago, in November 2021. That was the highest it’s ever traded. Since hitting a low of $101.81 at the beginning of 2023, Elon Musk’s company has delivered a two-year return of 234%.

It seems Tesla’s ready to ride the Trump wave well into 2025. TSLA stock is just 15% away from $400, up three times that amount in the past month. The inauguration in January will undoubtedly spur more buying by investors who fear missing out.

If you think Tesla’s got more in the tank but don’t want to risk a company-specific bet, given that the S&P 500 is more expensive than it’s been since 2008-2009 during the financial crisis, many ETFs invest in the EV manufacturer.

However, these two ETFs should turbocharge your returns if Tesla hits $400.

Key Points About This Article:

Nearly one-fifth of ARK Autonomous Technology & Robotics ETF’s (Cboe BZX:ARKQ) net assets are held in Tesla (NASDAQ:TSLA).
While the SoFi Social 50 ETF (NYSEARCA:SFYF) is passively managed, Tesla is likely to be a major contributor to its future success.
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ARK Autonomous Technology & Robotics ETF (ARKQ)

If there is an active manager who’s bet more heavily on Elon Musk and Tesla than Cathie Wood, I‘d love to know who it is.

Wood has three ETFs invested in Tesla: ARK Autonomous Technology & Robotics ETF (Cboe BZX:ARKQ), ARK Innovation ETF (NYSEARCA:ARKK), and the ARK Next Generation Internet ETF (NYSEARCA:ARKW). The weights for the three funds are 16.45%, 15.18%, and 10.24%, respectively. Except for the Bitcoin holding in ARKW, Tesla is the top holding for all three ETFs.

Ark Investment Management, the company behind the ARK ETFs, filed its Q3 2024 13F holdings report with the SEC at the end of October. Its listed assets were $10.93 billion, of which Tesla accounted for 11%—considerably higher than any other stock.

Cathie Wood is such a big supporter of Elon Musk that she was recently quoted in a Fortune article about the Tesla leader becoming head of the Department of Government Efficiency, the department responsible for eliminating waste in the Federal government.

“‘They will use technology and other sensible measures to really rein in government spending,’ Wood said of Musk and Ramaswamy. ‘So I think it’s a good thing,’” Fortune reported on Nov. 15.

Wood’s reputation is on the line. She’ll do and say everything in her power to ensure she stays on Musk’s good side. Her financial well-being and that of her many clients depend on it.

ARKQ has $762 million in net assets, with Tesla and the rest of the top 10 holdings accounting for nearly 63% of the portfolio. The remaining 27 stocks account for 37%. Tesla’s 16.45% weighting is nearly double the second-highest holding, Kratos Defense & Security Solutions (NASDAQ:KTOS), at 8.57%.

If she were really smart, Wood would buy more Palantir Technologies (NYSE:PLTR). As it is, ARKQ is up 27% in 2024 and 38% over the past 12 months.

SoFi Social 50 ETF (SFYF)

Several stacks with coins and the term ETF and a chart with stock prices.

SoFi Social 50 ETF (NYSEARCA:SFYF) is a fund driven by SoFi Technologies’ (NASDAQ:SOFI) SoFi Invest customers. Although it tracks the performance of the SoFi Social 50 Index, the index itself is determined by the 50 most widely held U.S.-listed stocks in SoFi Accounts.

According to the summary prospectus, “Securities in the Eligible Universe are sorted based on (1) the number of SoFi Accounts that hold a particular security and (2) the total market value of the security held in the SoFi Accounts (the “Weighted Average Value”). Each security in the Eligible Universe is then ranked from highest to lowest based on its Weighted Average Value (e.g., the security with the highest Weighted Average Value is assigned rank.”

Reconstituted and rebalanced monthly with a 10% cap on individual stocks and 50% for a sector.

Tesla is the top holding, accounting for 12.29% of the ETF’s net assets, which is $20.1 million. The top 10 holdings account for 56% of the portfolio, with the other 40 accounting for 44%.

The top three sectors by weight are technology (33.12%), consumer cyclical (28.68%), and communication services (15.83%). Large-cap stocks account for 82% of the ETF, with an average market cap of $354.42 billion. The big downside of the ETF is that all of the Magnificent Seven are held in the top 10.

Given that SoFi’s customers determine the holdings, I just don’t see Tesla falling out of the top position in the near future. If its share price goes to $400 and beyond, SFYF will do better than most ETFs in 2025.

About the Author Will Ashworth →

Originally from Toronto, I've lived in Halifax, Nova Scotia, for six years. I've written about public and private investments since 2008. I've been passionate about investing since taking a high school money management course. I enjoy helping others put their money to work. I'm particularly interested in creating model portfolios and finding special-situation stocks worth investing in.

I've appeared in publications in the U.S. and Canada, including Barchart, Kiplinger, InvestorPlace, The Motley Fool Canada, Investopedia, and several others.