Why is Cathie Wood Still Buying Tesla Stock Even After Everyone is Getting Rid of it?

Discussions about Cathie Wood often center around the performance of her funds and the rationale behind her investment decisions. 

While some see her as a visionary investor with a keen eye for disruptive technologies, others view her as a reckless speculator whose bets could result in substantial losses for investors.

So Wood’s penchant for heavily investing in growth stocks, particularly in the tech and innovation sectors, has earned her both praise and criticism. 

On one hand, her funds, such as the ARK Innovation ETF, have delivered impressive returns during periods of market exuberance, capturing the attention of retail investors on platforms like Reddit.

However, Wood’s aggressive bets on speculative stocks and her willingness to double down on companies facing significant challenges have also drawn scrutiny. 

Skeptics argue that her investment approach is too speculative and lacks the discipline of traditional value investing. 

Some Redditors have even coined terms like “Woodstocks” to refer to the volatile and high-risk stocks favored by Wood’s funds. 

In fact, here are some more quotes:

“She’s a YOLO investor who got lucky during COVID, where lots of stocks rapidly became overvalued and ‘growth’ companies that only grew during COVID were pushing her fund to astronomical levels. She doesn’t have the consistency of gains that other investment managers have.” u/Apart-Bad-5446

“She’s the living breathing form of: “everyone’s a genius in a bull market”

The true leaders show their prowess in a downturn, all of her moves crashed.

” u/backroundagain

“I think Cathy is a female version of Sam Bankman Fried.” u/NY10

“She’s a lying K**t who steals investors’ money by pretending to be smart… However investors continue to give her money, making her rich. So maybe she’s a genius, idk lmao” u/bravohohn886

And my personal favorite comment (from YouTube): “If Cathy Wood and Jim Cramer had a baby that baby would bankrupt the planet.”

With many bad decisions behind her, on April Fools of all days, she made perhaps one of her worst ones. 

Her recent move to invest $15 million in Tesla shares ahead of the Q1 deliveries report has stirred quite a buzz in the financial world. 

But instead of boosting confidence, her timing couldn’t have been worse. The Tesla stock took a nosedive, plummeting by 5.3% to $165.98 per share on Tuesday, resulting in a staggering $30 billion loss in market value for the company.

And in fact, she doubled down and bought even more stocks the next day! 

Wood, known for her bold investment strategies, has often been in the limelight, but this time, her decision seems to have backfired. 

With Tesla already facing scrutiny over production challenges, supply chain disruptions, and increasing competition in the electric vehicle market, Wood’s move raises eyebrows.

It’s hard to say for sure why Cathie Wood is buying so much Tesla stock, as her investment decisions are based on her own analysis and beliefs about the future of the company and the electric vehicle market. 

She seems to have a relentless long-term bullish outlook on Tesla, believing in its potential to disrupt the automotive industry and lead the transition to electric vehicles.

Banking on Robotaxis

Wood has been a staunch supporter of Elon Musk’s electric vehicle (EV) company for quite some time. 

According to ARK’s research team, they anticipate the stock reaching $2,000 by 2027, with Tesla’s robotaxi business being a significant factor in driving this growth.

ARK’s projection of Tesla stock reaching $2,000 by 2027 with the robotaxi business as a driving force might seem utterly bonkers to many observers. In fact, their bull projection models a 25% probability that Tesla could be worth $2,500 per share or more in 2027! 

Even their bear projection is $1,400.

This ambitious forecast pushes the boundaries of conventional wisdom, considering Tesla’s current stock price and market conditions.

Tesla’s Full Self-Driving (FSD) technology still has a long way to go before reaching the level of sophistication required for widespread adoption and deployment of robotaxis. If ever.

For example, up until a couple of days ago, there was a message warning drivers that FSD “may do the wrong thing at the worst time.” Yikes!

Despite Elon Musk’s ambitious promises and continuous updates, FSD remains a work in progress, grappling with technical limitations, regulatory hurdles, and safety concerns

While advancements in autonomous driving technology are undoubtedly exciting, the gap between Tesla’s current capabilities and the vision of fully autonomous vehicles ferrying passengers without human intervention is notable. 

Therefore, pinning Tesla’s stock reaching $2,000 solely on the success of its FSD and robotaxi business seems way too optimistic, given the current state of technology and the challenges ahead.

Achieving such a lofty valuation within a relatively short timeframe would require Tesla to overcome various hurdles, including increased competition, production scalability issues, regulatory challenges, and the successful rollout of new technologies.

Avatar photo
Three Investeers
Articles: 34
eToro Signup