Cathie Wood just keeps buying more of this great AI stock

She’s at it again: Cathie Wood, the head of Ark Invest, is too buy up shares Tesla (NASDAQ: TSLA) with purchases worth more than $160 million to date through 2024.

Is it a brilliant move or a big mistake? Here’s what you need to know.

What is happening

As mentioned above, Wood and her team have purchased more than $160 million worth of Tesla stock since the beginning of the year. Wood’s flagship fund, the ARK Innovation ETF (NYSEMKT: ARKK)now owns approximately $640 million worth of Tesla stock, making the company the fund’s second-largest holding after Coin base.

Ticker

Company Name

Market value (in millions)

Weight

MINT

Coinbase worldwide

$628.1

8.11%

TSLA

Tesla

$626.7

8.09%

YEAR

Year

$625.1

8.07%

PATH

UiPath

$490.1

6.33%

SQ

Block

$489.6

6.32%

Data from ARK-funds.com as of February 7, 2024.

ARK Invest remains optimistic that Elon Musk and the rest of Tesla’s management team will find a way out of the predicament they found themselves in after a disappointing fourth-quarter earnings report and weak guidance.

To summarize: Teslas gross margins continue to form craters, reducing their appeal to competing automakers.

TSLA Gross Profit Margin Chart (Quarterly).

Additionally, the company issued moderate expectations for auto volume growth through 2024, blaming the push toward its next-generation model, due in 2025.

In any case, Wood’s huge bet on Tesla shows that she believes better days lie ahead for the company. But what is her exact statement?

Wood’s Tesla thesis, valuation and Elon Musk

In short, Wood and her team are taking a longer-term view of Tesla. ARK Invest has a $2,000 price target on the stock due to its ability to perfect and monetize its fully self-driving (FSD) software. Additionally, Wood believes the company can leverage its FSD…

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