Tesla’s Bumpy Journey
It has been a turbulent year for Tesla. Comparatively, while other tech giants such as Nvidia and Microsoft have soared to record valuations, Tesla has remained relatively stagnant, trading near the same level as a year ago and down approximately 30% from its summer peak.
Following the release of its quarterly numbers at the end of January, the company experienced a significant drop, with the stock plummeting over 12% on the day.
Despite this downturn, Cathie Wood, a renowned investment guru, purchased 377,000 shares of Tesla for her ARK Innovation ETF. This move raises a fundamental question – why did Wood choose to acquire additional shares during a period of decline?
Investing Guru’s Strategy
Cathie Wood’s investment approach involves a steadfast belief in a company’s long-term vision. By purchasing shares after a substantial dip, her strategy aims to capitalize on the market downturn and acquire stock at a lower price, aligning with her conviction of the company’s enduring potential.
Wood is known for constantly recalibrating her fund’s holdings by divesting from overperforming stocks and acquiring underperforming ones. This strategy has contributed to ARK Innovation ETF’s remarkable 22% return over the year.
Long-Term Potential
Despite the immediate challenges, Tesla continues to exhibit significant promise. Wood’s aggressive investment in the company demonstrates her confidence in its ability to deliver on its futuristic vision. Tesla’s extensive investments in AI and robotics for autonomous driving technology and robotics showcase its aspiration to revolutionize the automotive industry.
If Tesla realizes its vision, the potential revenue generated could substantially justify a stock price well above its current valuation of approximately $200.
Maximizing Investment Strategies
Investors favoring Wood’s investment philosophy can directly invest in the ARK Innovation ETF. Additionally, for those seeking to magnify their investment perspectives, leveraged funds like the AXS 2X Innovation ETF provide an avenue for potential amplified returns.
Conversely, for traders adopting a contrarian view, AXS offers the AXS Short Innovation Daily ETF, designed to yield inverse returns as compared to ARK Innovation ETF.