As Tesla Stock Sank On Earnings, Cathie Wood Loaded Up

Tesla sank more than 8% in Thursday's stock market, giving up key levels, in the wake of second-quarter earnings and CEO Elon Musk's conference call comments. However, Cathie Wood and Ark Invest saw that as an opportunity to buy more of their favorite stock.

Wood's ARK Innovation ETF, ARK Autonomous Technology & Robotics ETF and ARK Next Gen Internet ETF bought a combined 143,190 TSLA shares on Thursday for an estimated $43.72 million, according to Wood's ETF daily trade disclosures.

Wood's decision to scoop up more than 140,000 TSLA shares Thursday comes after she made another big purchase last week ahead of the EV giant's Q2 earnings report.

Tesla Stock Tumbles On Earnings

TSLA stock gained 3.5% to 316.06 during Friday's stock market, after falling 8.2% decline to 305.30 on Thursday. Tesla stock undercut the 50-day and 200-day lines on Thursday.

It's still in a new base with a traditional 367.71 buy point, according to MarketSurge chart analysis. That base is within a much-larger consolidation.

Business Insider early Friday reported that Tesla has circulated a memo to staff that its expected robotaxi ride-hailing service expansion to San Francisco this weekend will have a "safety monitor" in the driver's seat with full access to the brake and steering wheel. This would mark a change from the limited service in Austin, Texas, where there is a safety monitor in the front passenger seat and fly in the face of claims that Tesla is rolling out an autonomous taxi.

Tesla does have a ride-hailing permit in California, but no permits for autonomous driving testing.

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Tesla Earnings, Conference Call

Tesla earnings dropped 23% to 40 cents a share, in line with second-quarter views. Revenue declined 12% to $22.496 billion, slightly beating.

Automotive revenue fell once again while Tesla Energy revenue declined vs. a year earlier.

Regulatory credits fell to $439 million vs $595 million in Q1 and $890 million in Q2 2024. ZEV (zero emission vehicle) credit revenue is likely to trend lower. The Trump budget immediately ended U.S. ZEV credits and said automakers no longer face emission fines for the past three years.

Tesla said in the Q2 earnings release that it did produce some initial builds of the "affordable" vehicle in June, with "volume" output later this year. Musk said the new EV will "look just like the Model Y," a further signal that it'll be a stripped-down MY.

Another Tesla executive said deliveries won't start until at least Q4, after $7,500 U.S. tax credits end Sept. 30.

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Musk was bullish on robotaxis during the conference call, predicting a rapid expansion within Austin and in key markets, pending "regulatory approval."

However, overall, Musk sounded a more muted tone on the second-quarter conference call and just before it ended, Musk said that Tesla "probably could have a few rough quarters" as EV tax credit goes away after Q3 under President Donald Trump's budget.

"I'm not saying there will, but we could. You know, Q4, Q1, maybe Q2 but once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I would be surprised if Tesla's economics are not very compelling," Musk said.

This comment underscores Musk is counting on the robotaxi ride-hailing service and full self-driving to revive growth with the auto business struggling.

Cathie Wood has been long time big proponent of Elon Musk's robotaxi effort.

Tesla Stock Trend

Tesla stock rallied from late April to late May in part because Musk said he was backing away from politics and the Trump administration. Since then, Tesla stock has tumbled and rebounded according to news cycles — many generated by debate between Musk and Trump.

The stock initially soared after the robotaxi launch but Tesla stock closed Friday down around 2% since the June 22 service release.

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At Friday's stock market close, Tesla stock was up 33% since the April 22 Q1 conference call, lifted by robotaxi bets. Shares are down about 22% for the year, and 35% below their all-time high of 488.54.

Tesla stock has a 21-day average true range of 3.96%. The ATR metric, available on IBD's MarketSurge charting tool, gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily stock market action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.

Investors can keep tabs on the IBD Leaderboard watchlist, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.

Tesla stock has a 55 Composite Rating out of a best-possible 99. The stock also has a 72 Relative Strength Rating and a 56 EPS Rating.

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