Cathie Wood is Buying the Post-Earnings Dip in Tesla Stock. Should You?

Tesla (TSLA) shares sit comfortably in the green on Friday following news that famed investor Cathie Wood has loaded up on them on the post-earnings weakness. 

In total, the founder and chief executive of Ark Invest bought 143,190 shares of Tesla across three of her flagship, actively managed exchange-traded funds (ETFs). 

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Despite today’s gain, Tesla stock remains down some 14% versus its May high and more than 25% versus its year-to-date high set in mid-January. 

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Why Does Cathie Wood Remain Bullish on Tesla Stock?

Wood’s purchase of TSLA shares despite disappointing Q2 earnings is a major vote of confidence in the company’s long-term potential. 

The renowned tech investor remains positive on Tesla primarily because she no longer views it as an electric vehicle (EV) maker only. 

According to her, the company is a future leader in autonomous mobility, artificial intelligence (AI), and robotics. 

Note that Cathie Wood maintains her long-term price target on Tesla stock at $2,600 – reassuring investors that its current dip will likely prove temporary only.  

Morgan Stanley Reiterates TSLA Shares as Top Pick

Morgan Stanley’s senior analyst Adam Jonas agrees with Wood’s constructive view of Tesla shares as well. 

In a post-earnings research note, Jonas agreed TSLA is grappling with slower car sales, loss of EV incentives, and higher costs from tariffs, but said, at the same time, it’s investing heavily in new technologies like autonomous vehicles and humanoid robots.

And while these new projects may not make any money right away, they could be very profitable over the long-term, he told clients. 

Much like Cathie Wood, the Morgan Stanley analyst is convinced that Tesla is transitioning from a run-of-the-mill EV maker to a leader in AI, robotics, and autonomy, and that’s what will drive the TSLA share price up moving forward.  

How Wall Street Recommends Playing Tesla Here

Other Wall Street firms, however, recommend treading with caution in TSLA shares after the EV maker’s disappointing Q2 earnings earlier this week. 

According to Barchart, the consensus rating on Tesla stock currently sits at “Hold” only with the mean target of about $298 indicating potential “downside” of some 6.0% from current levels. 

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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. For more information please view the Barchart Disclosure Policy here.