Cathie Wood’s Ark Investment Management sold nearly $25.5 million in Tesla shares on Wednesday, even as the electric vehicle maker’s stock price surged. The high-profile fund manager shed 97,599 Tesla shares across three Ark ETFs — the ARK Innovation ETF, ARK Next Generation Internet ETF and ARK Autonomous Technology ETF.
Tesla stock climbed 5.9% to close at $261.16 on Wednesday, clearing a key technical level of its 50-day moving average. The rally came as bullish investors bet on Tesla rebounding in the fourth quarter with new Model 3 production in China and the expected launch of the hotly anticipated Cybertruck.
Tesla is now flashing an aggressive buy signal for investors willing to take on some risk. With a buy zone between $254.77 and $258.40, Tesla presents an opportunity for traders looking to ride the upside. The timely buy signal comes just as Tesla announced a new lower-priced rear-wheel drive Model Y now available in the U.S. market.
Priced from $43,990, the new Model Y undercuts the previous base version by nearly $4,000. With 260 miles of range, deliveries of the cheaper Model Y variant are expected to start in October or November. The new model continues Tesla’s strategy of reducing prices across its lineup over the past year to spur EV adoption.
On Thursday, Tesla stock dipped 0.6% to $259.60 amid a broader market decline. But the bull thesis remains intact for the EV pioneer.
Tesla In Buy Zone As Ford, GM Strike Helps Bull Case
Tesla continues developing a new base, tracing a cup with handle pattern. The buy point stands at $278.98, according to analysis by MarketSmith. The ideal entry would come on a breakout past $278.98 with strong volume.
Analysts point to the United Auto Workers strike against Ford, GM and Stellantis as a potential boon for Tesla and its non-unionized workforce. With its Detroit rivals crippled by work stoppages, Tesla avoids labor disputes and can capitalize on production delays.
The sales by Ark Invest this week mark a return to selling after Cathie Wood took nearly a month off from trimming her Tesla position. Since mid-June, the high-profile fund manager has sold over 1 million Tesla shares. The periodic profit-taking comes after a huge run-up in Tesla stock over the past two years.
Despite the lightening up, Tesla remains a core holding for Wood’s Ark funds. It represents the number one position in ARKK at 11.3% weighting. TSLA also takes the top allocation in ARKQ at 11.64%. And it ranks fourth in ARKW at 6.77% of assets.
Wood clearly believes in the long-term upside for Tesla even as she locks in some gains. The innovative automaker retains its leadership in electric vehicles thanks to continuous technology improvements.
Analysts Bullish on Tesla’s Q4 Rebound, Cybertruck Launch
Tesla bulls see potential catalysts ahead that could re-accelerate growth after recent production challenges. The company’s key Gigafactory in Shanghai underwent upgrades over the summer to gear up for refreshed versions of the Model 3 and Model Y.
The revamped factory aims to boost output with improved manufacturing efficiency. That sets the stage for a cyclical rebound in China deliveries in the fourth quarter after recent weakness.
Meanwhile, excitement continues building for the launch of Tesla’s Cybertruck late this year. The futuristic pickup truck could expand Tesla’s addressable market substantially if it succeeds. Cybertruck reservations have already topped 1.25 million even before first deliveries.
Tesla also recently held its “AI Day” event to showcase progress in artificial intelligence needed for autonomous driving. While Full Self Driving capability remains a work in progress, Tesla is leagues ahead of competitors in advanced driver assistance systems. The continual improvements keep Tesla in pole position as the automation race accelerates.
Between its China retooling, Cybertruck debut and A.I. leadership, Tesla enters the rest of 2022 with strong drivers to potentially recharge growth. Bulls are betting heavily that the second half slowdown will prove temporary.
Tesla Stock Flashes Technical Strength
Technically, Tesla stock shows resilience and continues developing a new base after its last breakout in early April. Shares are shaping the right side of a cup pattern with a buy point above $278.
According to IBD’s MarketSmith analysis, Tesla stock’s Relative Strength line is right at new highs, indicating strong outperformance vs. the S&P 500. Its EPS and RS Ratings come in at 93 and 96, respectively, out of a best-possible 99.
Within its auto manufacturer peer group, Tesla retains the number one rank. The company’s innovative culture and cutting-edge technology keep it a leader within the industry.
With its upward trajectory intact, Tesla offers an intriguing risk/reward for investors comfortable with some volatility. The recent golden cross pattern, when the 50-day line crossed above the 200-day line, provides another positive signal. The stock has repeatedly found support near its 50-day line during any retreats.
Now flashing multiple buy signals, Tesla stock could be poised to reaccelerate if the company executes well in coming months. Its early mover advantage in EVs gives it a dominant position to capitalize on growing demand. Tesla still faces production challenges and hasn’t become consistently profitable. But its addressable market and growth trajectory give investors reasons to be bullish.
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