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Cathie Wood Keeps Doubling Down on Tesla (TSLA) Stock

For Cathie Wood, Tesla’s (NASDAQ:TSLA) losing streak is still a buy-the-dip opportunity. The founder of Ark Invest is known for her contrarian bets on beaten-down stocks. Recently, she made another large-scale TSLA stock purchase, adding…

For Cathie Wood, Tesla’s (NASDAQ:TSLA) losing streak is still a buy-the-dip opportunity. The founder of Ark Invest is known for her contrarian bets on beaten-down stocks. Recently, she made another large-scale TSLA stock purchase, adding almost 70,000 shares across multiple funds.

The electric vehicle (EV) leader garnered some momentum ahead of its March 1 Investor Day. However, when CEO Elon Musk’s presentation on Part 3 of his Master Plan disappointed investors, TSLA quickly reversed course and began falling. The stock has made no real progress since then, but Wood clearly isn’t worried. However, that doesn’t mean that investors shouldn’t regard the stock through a skeptical lens.

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Let’s look closer at today’s news and what investors should expect as Tesla moves forward.

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What’s Happening With TSLA Stock

After news broke of Wood’s latest purchase, TSLA stock began rising. However, this growth didn’t last long. Two hours into intraday trading, shares had slipped back into the red. As of this writing, they are down 0.25% for the day and look primed to fall even further. It has been a highly volatile month for Tesla, but the stock has mostly trended downward through it all.

This isn’t the first time Wood has made a bet on TSLA stock this year. During the first week of 2023, she purchased  176,000 shares following the company’s disappointing Q4 delivery report. Now she’s repeating this pattern, doubling down on TSLA after the company has failed to deliver what most investors want to see. Wood acquired 69,329 shares this time, adding 51,960 to her Ark Innovation ETF (NYSEARCA:ARKK) and 17,369 to her ARK Next Generation Internet ETF (NYSEARCA:ARKW). As Seeking Alpha Reports:

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“ARKK now holds $726.5M in market value of TSLA while ARKW holds $81.85M. Additionally, ARKK has Tesla listed as the fund’s heaviest weighted position at 9.96%. At the same time, ARKW lists Tesla as its fourth most significant position with a 6.57% weighting.”

As she has for months, Wood is making it clear that she believes in Tesla’s growth potential. It makes sense that she’d be doubling down on TSLA. Wood is highly focused on artificial intelligence (AI) stocks, and she sees Tesla as one of the booming sector’s biggest winners. However, her faith in Tesla on the AI front may be misguided. AI expert Gary Marcus recently stated that he believes Musk fundamentally misunderstands much of the technology, citing the history of problems with Tesla’s autopilot software.

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Wood Is Banking on a Tesla Resurgence

Marcus isn’t the only one to cast doubt over Tesla. Analyst Adrian Yanoshik of Berenberg recently downgraded TSLA stock, moving it from a “buy” to a “hold” rating. Morgan Stanley (NYSE:MS) named Ferrari (NYSE:RACE) its top auto stock pick, knocking Tesla out of first place. This news shocked investors as it came from analyst Adam Jonas, a longtime TSLA stock bull who appears to be losing faith in the company.

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Tesla has surprised skeptics before and come roaring back after being pushed down. That’s what Wood is banking on, as she has been for months. Anyone who follows her knows that her modus operandi is to bet on tech stocks at their lowest and wait for them to rise again. None of the obstacles facing TSLA stock now have deterred her from this strategy, even as the company faces a challenging road ahead. However, less risk-averse investors have plenty of reason to proceed with caution.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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