As Tesla stock dropped Wednesday, falling to a three-month low on an analyst downgrade, Cathie Wood continued her pattern of loading up on the EV giant during big share price dips.
Wood's Ark Investment Management spent an estimated $29 million on more than 190,000 TSLA shares Wednesday, after Tesla sank 4.3% following a downgrade.
As of Thursday, Tesla stock is the top holding in ARK Investment with a weight of 9.66%. The recent Tesla stock purchases were done through ARK Innovation ETF and ARK Next Generation Internet ETF. The total worth of Wednesday's buys is around $29.36 million, based on Tesla stock's closing price of 153.75.
Wood's decision to jump in on Tesla stock Wednesday follows purchases worth more than $40 million a week ago. That buying spree came as Tesla sank nearly 10% following the EV company's Q1 earnings.
On March 8, Wood, with Tesla tock slipping 3%, scooped up $12.62 million worth of TSLA. Wood also grabbed a hefty share of Tesla stock on Jan. 3. TSLA shares plummeted more than 12% that day, the worst showing in 2023 and Wood purchased around $19 million of Tesla stock. Three days later, TSLA hit bear-market lows of 101.81.
Wood has purchased 1.64 million shares so far in 2023.
Tesla Takes A Tumble
Tesla fell 4.3% to 153.75 in Wednesday's market trade, after an analyst downgraded TSLA, hinting the global EV giant may need a "reset" and raising questions whether huge Tesla profits were temporary.
A Jefferies analyst dropped the firm's rating for Tesla to "Hold," down from "Buy." Analyst Philippe Houchois also cut his Tesla stock price target to 185, down from 230.
"We cut our rating to Hold pending a reset of performance and possibly governance," Houchois wrote.
Houchois added Tesla's strategy of growth over margin has its "logic and resets expectations." However, it also poses a question whether its profit edge was structural or a timing difference, according to the analyst.
Jefferies slightly trimmed 2023 forecasts for Tesla revenue, profit margins, deliveries and free cash flow.
TSLA Fundamentals
Tesla jumped 4.2% to 160.20 Thursday during market trade. The stock plunged 10.8% last week to its worst levels since late January. Most of the decline came Thursday, after Tesla reported its gross margin dived more than expected and Elon Musk signaled more declines could be coming.
TSLA stock has dropped 23% in April.
Tesla stock no longer has a base. If Tesla rebounds it could form a double-bottom base with a 207.89 buy point.
Tesla sits fourth in IBD's Auto Manufacturers industry group. TSLA has a 62 Composite Rating out of 99. The stock has also has a 20 Relative Strength Rating. The EPS Rating is 92 out of 99.
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