Wall Street closes at a record for the first time since end of January
Shares of Tesla Inc were firmly in a downtrend to begin April, down significantly from their December all-time high. While the stock hasn’t set a fresh low in nearly a week, the broader picture remains one of weakening momentum and fading confidence.
That is what makes investor Cathie Wood’s latest move so interesting. Over the past week, her ARK funds have added roughly $28 million worth of Tesla stock, stepping in at a time when sentiment remains fragile, and the company’s narrative is being questioned.
With earnings due next week, investors are right to be wondering whether this is a smart move into a potential turning point, or simply another risky bet in a stock that still has so much to prove. There’s an argument to be made for each side—let’s check them out.
Cathie Is Back: Tesla’s Long-Term Potential
Ever since Tesla shifted the narrative from a car company to a futuristic tech company, Wood has been leaning into this pivot. She views the company not as a traditional automaker, but as a long-term leader in autonomy, artificial intelligence, and robotics.
Short-term setbacks like disappointing delivery data or margin pressure are almost secondary, especially when compared to what earnings could be down the line. What matters is whether Tesla continues to make progress toward its broader vision, and on that front, there have been some encouraging developments recently.
Most notably, Tesla secured its first European approval for supervised Full Self-Driving, a milestone that adds real-world validation to its autonomy ambitions. While still early, this kind of regulatory progress is exactly what long-term bulls have been waiting for.
For Wood, moves like this likely reinforce the idea that the recent pullback is an opportunity rather than a warning sign.
The Bear Case Has Not Gone Away
At the same time, the reasons for the recent weakness are still very real. Tesla’s latest delivery report disappointed, highlighting concerns around slowing demand, increasing competition, and the need for continued pricing adjustments. Inventory build has also raised some concerns.
These are not minor issues, particularly for a stock that continues to trade on a premium valuation. Even in the midst of a long-term downtrend, Tesla’s price-to-earnings ratio remains in the triple digits, suggesting the market is still pricing in significant future growth.
That is why analyst opinion remains so divided. While firms like RBC, Deutsche Bank, and Robert Baird have reiterated Buy or equivalent ratings this month, with price targets reaching as high as $538, others remain far more cautious. The near 50% in targeted upside from that stands in stark contrast to last month’s $280 price target and Underperform rating from BNP Paribas. Tesla has always attracted polarizing opinions, and it shows no signs of changing that anytime soon. Indeed, the gap between these analyst ratings epitomizes the friction between Tesla’s efforts to stabilize its core business and its all-in approach to its long-term vision.
Price Action Suggests a Turning Point Could Be Near
That said, at least from a price-action perspective, the setup has started to lean more towards the bulls. The fact that Tesla has not made a new low since last week suggests that selling pressure may be easing.
At the same time, after such a relentless selloff, there’s a sense that sentiment is close to being washed out. That creates the kind of environment where even a modest surprise in next week’s earnings report could drive a sharp move to the upside. The good news for the bulls is that Tesla has a long history of delivering just exactly that.
This is likely what investors like Cathie Wood are positioning for. Sure, the structural risks are still there, but the potential reward is also looking increasingly compelling.
Earnings Will Decide a Lot
All of this sets up a critical moment for Tesla, which is due to report Wednesday, April 22. With the stock having fallen so much, sentiment is weak, and the bar for success is considerably lower. If Tesla shows stability in vehicle demand and continued momentum in areas like autonomy, things could get interesting quickly.
For more cautious investors, however, the same event represents risk. If the report reinforces concerns around slowing growth or continued margin pressure, the downtrend could easily resume.
This is what makes the current setup so interesting. Cathie Wood is effectively leaning into the uncertainty, buying ahead of a major catalyst, in the belief that the long-term story will ultimately outweigh the near-term noise. Whether that proves to be the right move remains to be seen.