Cathie Wood Buys Tesla Again after 2023 Sell-Off, Will Her Accurate Prediction History Continue?

Moomoo News Global joined discussion · Jan 8, 2024 19:14

At the beginning of 2024, $Tesla (TSLA.US)$ continues to face bearish pressure from Wall Streets. The main reasons are attributed to an EV slowdown that is looming, phasing out subsidies from government, and the threat posed by BYD from China. During the first four trading days of this year, Tesla's stock price fell by 4.4%, closed at $237.49 on last Friday, causing the company's market value to shrink by over $30 billion.

However, based on Bloomberg's analysis of Ark's daily trading data, Cathie Wood's investment firm, Ark Investment Management LLC, acquired approximately 216,000 shares of Tesla during investments made on December 20 and January 3, after previously selling for three straight quarters.

Cathie Wood Buys Tesla Again after 2023 Sell-Off, Will Her Accurate Prediction History Continue?

Wood, who has been bullish on Tesla for many years, has gained significant profits and fame from investing in Tesla. What are the main reasons behind Wood's increase in holdings this time?

1. The Detroit Three automakers decelerated EV plans

Detroit automakers were expected to excel in electric vehicles by changing their strategies to improve their poor situation. However, the reality is that they are cutting back on their EV plans, mainly due to slow transformation and high costs.

Ford has recently decided to reduce the planned production of its electric F-150 by 50% for 2024, down from 3,200 to 1,600 per week, citing losses of $60,000 per electric vehicle sold. GM is also not optimistic about its future targets. Last October, it announced that it is pulling back on its ambitions to build 400,000 EV units in North America by the mid-2024 calendar-year timeframe.

Wood believes that these carmakers' hesitation is causing them to miss out on potential opportunities, which in turn presents advantageous prospects for Tesla.

The fact that they're pulling back means there's more share for Tesla and others who choose to go for it.

2. Tesla realized a record-breaking delivery and production volumes in 2023

Despite the slowdown in the growth of the electric vehicle market, Tesla delivered impressive results in 2023, continuing to achieve remarkable success. In 2023, the company achieved record-breaking production and delivery volumes, reaching 1,845,985 and 1,808,581 respectively. These figures surpassed the annual delivery target set at 1.8 million vehicles and slightly exceeded Wall Street's expectations.

3. Tesla is not just an EV manufacturer, but an AI/robotics company

Musk stated that he wasn't too concerned about the intensifying competition in the global electric vehicle market. In an X post on January 3, he wrote, "Tesla is an AI/robotics company that appears to many to be a car company." For tech companies, they often receive higher valuations than traditional automakers.

It's clear that Wood agrees with Musk's perspective. "Traditional auto analysts deemed Tesla as doomed to failure: they did not understand that Tesla was a robotics, energy storage, and artificial intelligence company, not an auto company", Wood once wrote.

In last April, Wood set a target range of $1400 to $2700 for Tesla by 2027, a range that even at its lowest point would be considered quite bullish and crazy. However, Wood has already proven her previous prediction to the market. In 2018, she opposed Musk's privatization plan and believed that Tesla's stock price could reach $700 to $4,000 by 2023. By 2021, Tesla's stock price had surpassed Ark's bull case two years ahead of schedule. And it came pretty close to Ark's bull case by the end of 2023 after a slight fall from grace.