Cathie Wood Is Buying Tesla Stock Here. Should You?

Yahoo

6 hours ago

Tesla (TSLA) is seeing a chronic sales decline this year amidst rising competition from the likes of BYD (BYDDY), but this has not deterred influential investor Cathie Wood.
The founder and chief executive of Ark Invest loaded up on nearly 60,000 TSLA shares late last week across two of her flagship funds: the ARK Innovation ETF (ARKK) and the ARK Next Generation Internet ETF (ARKW).
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At the time of writing, Tesla stock is down more than 13% down versus its three-month high.
Cathie Wood investing more than $18 million in TSLA shares last week is notably positive for investors as it signals strong conviction in the company's long-term potential.
Wood is bullish on the EV stock primarily because she sees transformative potential in its robotaxi and humanoid robot initiatives.
According to her, autonomous services will drive up to 90% of the automaker's future value, with software-like margins exceeding 80%.
Wood even has a long-term price target of $2,600 on Tesla stock, indicating relentless confidence in its innovation pipeline, including affordable EVs and artificial intelligence enabled mobility.
Despite the company's launch of robotaxi services and progress on humanoid robots, UBS analyst Joseph Spak does not share Wood's optimism on Tesla stock.
On Monday, Spak reiterated his 'Sell' rating on the EV stock, citing valuation concerns. TSLA has a forward price-earnings multiple of more than 230x currently – much higher than several top AI stocks, including Nvidia (NVDA), which trades at 41x forward earnings.
Additionally, the investment firm cited the 'removal of 100% margin credit revenue, and a CEO who's arguably distracted from the business,' for its bearish view on Tesla stock.
UBS currently has a $215 price target on Tesla that translates to potential downside of more than 30% from current levels.
Other Wall Street analysts also remain dovish on TSLA shares – especially since the EV company reported a 14% year-over-year decline in quarterly deliveries in the first week of July.
The consensus rating on Tesla stock currently sits at 'Hold' only with the mean target of $297 implying 5% downside from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com