Cathie Wood Is Doubling Down on Tesla (TSLA) Stock. Should You? thumbnail

Cathie Wood Is Doubling Down on Tesla (TSLA) Stock. Should You?

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Tesla Motors (TSLA) now an SP500 company with a busy Pond Springs location in northwest Austin, TX

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As CEO Elon Musk has been offloading shares of Tesla (NASDAQ:TSLA) stock, Cathie Wood has been picking them up. Recently, the famed contrarian investor announced that she has increased her TSLA stock holdings amid the company’s new controversy.

Ever since Musk successfully acquired Twitter, his focus has been on the social media platform. This hasn’t been good for TSLA stock, which has been steadily sliding downward all week, losing more than 10% of its value. But in keeping with her investment philosophy, Cathie Wood has increased her Tesla position across several funds. She has also acquired additional shares of other beaten-down tech stocks while offloading others.

Let’s take a look at Cathie Wood’s recent investments and what they mean for Tesla.

What’s Happening With TSLA Stock?

Whenever TSLA stock has dipped, Wood has seized the opportunity to acquire more shares. In late October, she doubled down on Tesla despite disappointing third-quarter earnings. Yesterday, the Ark Invest founder followed that same pattern through her exchange-traded funds (ETFs); the ARK Innovation ETF (NYSEARCA:ARKK) purchased 27,594 shares, the ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) added 9,173 shares and the ARK Next Generation Internet ETF (NYSEARCA:ARKW) bought 2,909 shares. Tesla is now the top holding for ARKQ. In ARKK and ARKW, it is the second-largest holding behind Zoom (NASDAQ:ZM).

Like TSLA stock, Zoom has long been a favorite stock for Cathie Wood. She also increased her position in ZM stock yesterday, along with fellow beaten-down tech stock Coinbase (NASDAQ:COIN). However, these purchases were financed with the help of Wood offloading Nvidia (NASDAQ:NVDA) stock. Wood also sold shares of penny stocks Berkeley Lights (NASDAQ:BLI) and TuSimple (NASDAQ:TSP), although the decision to sell the latter may have been driven more so by recent investigation news.

Clearly, Cathie Wood is maintaining her bullish stance on Tesla with all of these trades, though, even as experts express concerns. In late October, the famed investor outlined TSLA’s 10x potential, if the company can create a more affordable electric vehicle (EV). The fact Wood is doubling down on shares now indicates she still firmly believes in that potential.

Wood’s Tesla investments have helped push shares 7% higher today, even in the face of more bad news. Although it has been historically bullish, Wedbush recently lowered its price target on TSLA stock. The firm also removed Tesla from its top tickers list.

What Comes Next?

Wedbush is not the only one to have soured on TSLA stock lately. Since Musk has been focusing on Twitter, shares have fallen drastically as Wall Street shifts focus to more stable EV producers. However, Wood’s philosophy has always been to double down on the high-growth tech stocks that other investors are casting aside.

Cathie Wood’s recent NVDA stock sales remind us why this strategy is sometimes effective. The investor increased her NVDA holdings back in early September, during a period of steep decline. Since then, Nvidia has rebounded more than 10%. If Wood is correct about Tesla now, it will bounce back within the coming months as markets shift in 2023.

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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.