In this piece, we will take a look at the 10 best stocks to buy and hold for 5 years according to Cathie Wood.
As the saying goes, time and tide wait for nobody. This also holds true for Wall Street, where not only are fortunes made in a blink of an eye, but things can take a 180 degree turn the next moment. The same appears to be true for Cathie Wood of Ark Investment. While most hedge funds focus on creating balanced portfolios that seek to leverage all kinds of stocks, Wood’s firm chooses to focus exclusively on high growth sectors that it believes will disrupt the future. Wood is one of Tesla’s biggest bulls, and her insights have proven to be correct as the electric vehicle maker has defied all predictions of doom and gloom and managed to deliver hundreds of thousands of vehicles globally.
Since Insider Monkey tracks hedge fund data and investments to provide readers with the best stock picks, we’ve been following Wood for quite some time now. We took a look at her long term stocks as part of our coverage of 10 Best Stocks To Buy and Hold For 5 Years According To ARK’s Cathie Wood in 2021. Back then, Wood was a celebrity as her high-profile bets on the technology industry were paying off as the sector surged due to the booming demand in tech resulting from lock downs and stay at home mandates. Wood’s fund returned 20% in 2020, and it led to a long interview with Bloomberg. In this talk, she stressed that Ark’s investment horizon was five years, so any temporary corrections left her unfazed since the firm was in for the long haul. She added that while big ticket technology names were good stocks, the goal of her firm was to identify the next FANGs (now FAANG), and one sector that was ripe for growth was the DNA sector. Other sectors that she highlighted were ripe for growth in 2021 were artificial intelligence, energy storage, robotics, and blockchain.
Fast forwarding to 2024, let’s see how her top stocks have performed since then. Focusing exclusively on her top ten stocks back then and as of the first quarter of this year, only four stocks remain on the list. The rest have either been relegated to lower weights in the portfolio or have been eliminated altogether. The four stocks that remain have displayed mixed performance since the start of 2021. The worst performer has lost 86% since then, while the others are down by 73% to 39%. However, since these stocks are nevertheless still a part of Ark’s portfolio, it’s clear that Wood’s is convinced of their potential to disrupt the market and is holding on to them with this belief.
As for the stocks that were eliminated, several of these have bled more than 80% since then, while one has lost all of its value and been de listed from the NASDAQ exchange. Other stocks have also lost more than 90% of their value since 2021, and given that these belong to sectors such as telehealth and online education, it’s understandable since these sectors posted unbelievable gains during the era of lock downs but failed to retain investor interest once the situation normalized. Finally, none of the stocks that were part of Cathie Wood’s top stocks in 2021 have posted returns since then.
Shifting gears, investing in 2024 has seen the stock market divided into technology and non technology sectors. Even within the former, it’s mainly artificial intelligence and associated stocks that have delivered strong returns. So, Wood, whose firm targets high growth and disruptive stocks, has continued to struggle this year too. Ark Invest’s flagship ARKK fund is down 16.7% year to date, while tech heavy stock indexes are up by almost 20%. Disruptive companies require easy credit and robust business spending – both of which struggle in a high interest rate environment.
However, not all of Cathie Wood’s 2024 stock picks have suffered. Some of the strongest performers belong to social media, cloud-based advertising, financial services, molecular testing, and counter terrorism data analytics services. These stocks are up by 48%, 36%, 83%, 76%, and 52% year to date. On the flip side, some sectors that have struggled are biotechnology and software as a service (SaaS). Cathie Wood’s biotechnology stocks have lost anywhere between 86% to 64%, while her SaaS pick has bled 58%.
The last couple of years have been hard for growth stocks that are not part of the booming semiconductor industry. This is because of high interest rates, which not only damped investor risk appetite but also made it difficult for these firms to invest in growth. Since Wood is a pure play growth investor at heart, it’s unsurprising that her stocks have also suffered during this period. Ark’s latest investment portfolio was worth $14.4 billion as of March 2024 end, and given that some investors are optimistic that the Fed might finally start to cut interest rates soon, we decided to do a follow up piece and take a look at the top Cathie Wood stocks during Q4 2020 and see how they have performed since then. When reading about these stocks, readers are also advised to remember that the market of 2024 is a complete 180 degrees from the market of 2020 as back then interest rates were low and Internet and personal computing stocks were booming.
Cathie Wood of ARK Investment Management
Our Methodology
For our list of the best Cathie Wood stocks to buy and hold for five years, we scanned her Q4 2020 SEC filings and picked out the top ten stocks in which her firm had invested the most. Then, their performance since then was evaluated.
We also mentioned the number of hedge funds that had bought these stocks during the same filing period. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Spotify Technology S.A. (NYSE:SPOT)
Ark Investment’s Q4 2020 Investment Stake: $741 million
Number of Q1 2024 Hedge Fund Investors: 77
Share Price Performance Since 2020 End: -0.28%
Spotify Technology S.A. (NYSE:SPOT) is the popular music and audio content streaming services provider. Wood first bought the shares in Q2 2018, and after bumping her stake, has now trimmed her position to $42 million as of Q1 2024. Between 2021 and 2023, Spotify Technology S.A. (NYSE:SPOT) has grown its revenue from €9.6 billion in 2021 to €13.2 billion as of 2023 end. However, 2021 was the last year of profitability for the firm, and since then, its operating expenses have outpaced operating income, leading to consecutive annual losses. Spotify Technology S.A. (NYSE:SPOT) is aware of the operating losses, and it has cut down its workforce, brought a new chief financial officer on board, and merged its Parcast and Gimlet podcast studios into Spotify Studios after eliminating 200 workers. Despite the fact that it’s one of the oldest podcast providers, Spotify Technology S.A. (NYSE:SPOT) continued to grow its net and Premium users in 2023. The former grew by 113 million users while the latter boomed by 31 million, allowing it to further penetrate the market to demonstrate that there is additional room for growth and increase its revenue generation opportunities to offset operating losses.
Fund Artisan Partners commented on Spotify Technology S.A. (NYSE:SPOT)’s cost problems and the room to grow in its Q1 2024 investor letter. Here is what the fund said:
Spotify is a leading global audio streaming franchise with 600 million monthly active users. We believe its position in the supply chain is solid given a secular trend around the fragmentation of music as well as internal product and pricing initiatives. Shares rallied after the company reported strong earnings results, including growth of 23% for monthly active users, 15% for premium subscribers and 16% for revenue. The company also reported 140bps of gross margin expansion, to 26.7%, which we believe still has further to go due to likely price increases, potentially better terms with labels and further cost discipline.
9. Twist Bioscience Corporation (NASDAQ:TWST)
Ark Investment’s Q4 2020 Investment Stake: $830 million
Number of Q1 2024 Hedge Fund Investors: 23
Share Price Performance Since 2020 End: -65.12%
Twist Bioscience Corporation (NASDAQ:TWST) is a California based medical raw materials company that sells synthetic DNA raw materials that are used in gene editing, experiments, and other use cases such as leveraging DNA’s unique characteristics to store data. Ark Invest first bought the shares in Q2 2019 after it acquired a $6.2 million stake. After an all time high investment of $830 million, Cathie Wood’s latest stake in Twist Bioscience Corporation (NASDAQ:TWST) is $238 million. Since Twist Bioscience Corporation (NASDAQ:TWST) is one of the few companies of its kind, whose novel DNA uses cases extend from storage to creating biofuels and drug resistant crops, the firm has a large market at its disposal. However, promising a revolutionary technology and commercializing it are two different things, making it unsurprising that Twist Bioscience Corporation (NASDAQ:TWST)’s shares are down by 65% since the rush in 2020. While Twist Bioscience Corporation (NASDAQ:TWST) is yet to turn a profit, it has grown revenue from $90 million at the end of fiscal year 2020 to $245 million in the fiscal year ending in September 2023.
However, some of Twist Bioscience Corporation (NASDAQ:TWST)’s orders are unpredictable, as some of its customers place bulk orders at the start of the year, and revenue during Q1 of a calendar year can be inflated if more such orders take place. During Twist Bioscience Corporation (NASDAQ:TWST)’s Q2 2024 earnings call, management commented on this as it shared:
And one thing that was a bit particular this quarter is, we’ve got bigger number of the second kind of orders which are blanket pure orders. So those are — they come from customers where they kind of have a budget, and they decide — at the beginning of the year they decide where they’re going to spend that budget with which company. And so the blanket PO gets provided, gives us a sense of volume that’s coming. And then as the researcher design the sequence that they want, they send us a sequence, the others are already there, we produce, again ship and we book revenue.
And so what happened this quarter is, we had more blanket PO — orders that we typically have had in the first quarter of the calendar year. And I think that’s a reflection of the fact that in our first quarters, so in calendar Q4, some customers have tested Express Gene in our Q2, calendar Q1; more customers have tested the Express Gene. And as they have received those genes on time; basically our Express Genes do what it says on the label. I think we have earned the confidence of those companies and they have been willing to give us their blanket PO; other meaning, they are confident that they will order from us in the rest of the year. So I think that’s the big dynamic that we say — that we see. It’s a reflection of the strength of our offering.
8. Zillow Group, Inc. (NASDAQ:Z)
Ark Investment’s Q4 2020 Investment Stake: $841 million
Number of Q1 2024 Hedge Fund Investors: 77
Share Price Performance Since 2020 End: -64.3%
Zillow Group, Inc. (NASDAQ:Z) is a software company that operates a diversified platform for real estate transactions in the US. Ark Invest first took a stake worth $7.9 million in the firm in Q2 2019. This grew to $1.2 billion in Q2 2021, and sits at $9.6 million as of Q1 2024. October and November 2021 were particularly rough for Zillow Group, Inc. (NASDAQ:Z)’s shares, after its announcement that it would exit the home buying market. Back then, Zillow Group, Inc. (NASDAQ:Z) bought and resold homes, and provided the associated mortgage and escrow services. This segment generated $1.4 billion in revenue in 2020, but its inability to price the home market led to $500 million in write offs in a tumultuous era for the market during the coronavirus crisis. Since 2020 end, Zillow Group, Inc. (NASDAQ:Z) has failed to grow its revenue. It sat at $2.1 billion in 2021 end and dropped to $1.9 billion in 2023.
Due to its business model, Zillow Group, Inc. (NASDAQ:Z) has been unable to catch a break especially since high interest rates depress the housing and real estate market. This has led management to position the firm as a technology provider. During the Q1 2024 earnings call, Zillow Group, Inc. (NASDAQ:Z)’s management shared:
In an ongoing tough rate environment, we also continued to make strong progress in mortgages with Q1 revenue of $31 million, up 19% year-over-year and purchase mortgage origination volume growing more than 130% year-over-year. So in a hostile housing market and a noisy industry environment, why is Zillow outperforming? The simple answer is that Zillow is wholly-focused on solving real consumer problems with software in a giant industry that has historically had very little R&D investment. Digitally re-platforming and integrating a huge, disparate local industry where transactions are relatively infrequent is an audacious undertaking.
No other company is really even attempting it. We are advantaged primarily because we are a product and technology company first, and are able to attract and retain the especially talented people, who know how to build market and support great software products. This enables us to focus completely on delighting our consumers and their valued partners in pursuit of the dream of using technology to make moving simple and joyful. Our product prowess over the years has put Zillow in the enviable position of having a large engaged audience, who come to us organically, an audience who love, trust and rely on our brand. This product-led organic marketing growth story is rare, but it is common for the great ones. Those are the products and brands we admire the most.
7. Pure Storage, Inc. (NYSE:PSTG)
Ark Investment’s Q4 2020 Investment Stake: $930 million
Number of Q1 2024 Hedge Fund Investors: 41
Share Price Performance Since 2020 End: 183.99%
Pure Storage, Inc. (NYSE:PSTG) is a computer hardware company that provides hardware storage systems for data center use and software products to streamline cloud operations. Cathie Wood’s firm acquired a $53 million stake in the firm in Q1 2020, which peaked at $930 million in Q4 2020. The stake, as of Q1 2024, is $22.9 million. The AI wave has been kind to Pure Storage, Inc. (NYSE:PSTG), as the shares are up 77.6% year to date. Pure Storage, Inc. (NYSE:PSTG) offers lucrative SaaS services through its Evergreen model, which allows customers to manage their storage consumption according to need. This allows the firm to augment its hardware revenue through a software based recurring model, and it also offers customers the unique ability to speed up their data processing through an ‘all flash’ storage platform that removes slow SSD storage from the computer architecture. This mix of hardware and storage platforms, coupled with Pure Storage, Inc. (NYSE:PSTG)’s Pure//E family which enables low cost round the clock flash storage access enables the firm to capitalize on most segments of the data storage market which could help it in today’s boom in the data center market.
However, since Pure Storage, Inc. (NYSE:PSTG)’s business model is dependent on business spending, the continued impact of high rates on budgets might create headwinds. On this front, here’s what management had to say during the Q1 2025 earnings call:
Moving on to the market as a whole, we have not seen a significant change in the overall macro environment or customers’ intentions to buy. While we have great enthusiasm for our opportunities in AI, spending on AI may put pressure on other parts of IT budgets.
We believe that the storage market will fare relatively well in this IT economy, but have yet to see a major inflection. Overall, we believe that we are well positioned in all of the segments we compete in and we will continue to gain share across our markets. Our leadership position is now clearly demonstrated by our competitors’ increased fervor to mimic our strategy and our messages. We also believe that long-term secular trends for data storage are no longer based on the expectation of commoditized storage, but rather on high-technology data storage systems, and run very much in our favor.
6. Invitae Corporation (OTC:NVTAQ)
Ark Investment’s Q4 2020 Investment Stake: $1.1 billion
Number of Q1 2024 Hedge Fund Investors: N/A
Share Price Performance Since 2020 End: -99.98%
Invitae Corporation (OTC:NVTAQ) used to trade on the NYSE back when Ark Investment bought a $5.2 million stock in the firm in Q4 2016. The firm provides genetic testing equipment, and its tale is one of caution for companies that try to grow too fast too quickly and rely on debt. To understand this, consider Invitae Corporation (OTC:NVTAQ)’s long term debt. It sat at $439 million in 2020, for a debt ratio of 0.13. In 2021 and 2022, the long term debt boomed to $1.58 and $1.59 billion, respectively as Invitae Corporation (OTC:NVTAQ) took on debt to fund a whopping 13 acquisitions. By 2022 end, the debt ratio was 0.82, which marked a 5x increase. As interest rates rose to combat inflation, Invitae Corporation (OTC:NVTAQ) declared bankruptcy in February 2024, and announced in April that it will be acquired by another firm. It was delisted from the NYSE in February, and Ark Investment sold its $20.4 million Q4 2023 stake in Q1 2024.
5. Block, Inc. (NYSE:SQ)
Ark Investment’s Q4 2020 Investment Stake: $1.5 billion
Number of Q1 2024 Hedge Fund Investors: 65
Share Price Performance Since 2020 End: -70.37%
Block, Inc. (NYSE:SQ) is a financial technology company that allows users and retailers to make and receive payments and manage their finances. Since it’s one of the new age financial technology companies that enable customers to rely on non banking mediums for their money management, Block, Inc. (NYSE:SQ) has a large market at its disposal, particularly through its CashApp platform. Yet, this reliance on the retail end of the financial industry means that Block, Inc. (NYSE:SQ) is also dependent on the economy for its performance. The more robust the economy is, the higher incomes are, and the lower the prices go, the money Block, Inc. (NYSE:SQ) can make through CashApp and Square transactions. Therefore, any weakness in the stock can manifest itself if the US economy struggles and consumers decide to dial down their purchases.
Block, Inc. (NYSE:SQ) is one of the oldest stocks in Ark Investment’s portfolio. According to Insider Monkey’s data, the firm first bought the shares in 2016 by acquiring a $3.1 million stake. Since then, the shares have appreciated by 416%. Baron Funds mentioned Block, Inc. (NYSE:SQ) in its Q1 2024 investor letter. Here is what the firm said:
During the quarter, we also added to our existing investment in Block, Inc. The company provides a point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. After the company reported solid quarterly result, it has also guided to reach a rule of 40 on GAAP profitability for fiscal year 2026 (implying that the combination of gross profit growth and GAAP operating margins would be at least 40%). We believe Block’s businesses are resilient, and greater management focus on cost discipline should drive further margin expansion over the long term. We also believe that Block has a long runway for growth, durable competitive advantages, and a robust track record of innovation.
4. Teladoc Health, Inc. (NYSE:TDOC)
Ark Investment’s Q4 2020 Investment Stake: $1.5 billion
Number of Q1 2024 Hedge Fund Investors: 31
Share Price Performance Since 2020 End: -95.11%
Teladoc Health, Inc. (NYSE:TDOC) is a virtual health services provider that enables users to seek medical help online. Ark Investment acquired a $3.6 million stake in the firm in Q1 2018. This grew to an all time high of $2.6 billion in Q2 2021, and it sits at $242 million as of Q1 2024 end. Teladoc Health, Inc. (NYSE:TDOC)’s shares are down 95% since the start of 2021. The coronavirus boom made the stock trade at 20x its revenue, and from $1 billion in 2020 end sales doubled to $2 billion at the close of 2021. However, since then revenue growth has slowed down and between 2022 and 2023, Teladoc Health, Inc. (NYSE:TDOC)’s revenue grew by just 8%. The firm expects revenue to sit at $2.6 billion by the end of this year for flat growth. Teladoc Health, Inc. (NYSE:TDOC)’s first quarter results came with a downward guidance revision which reduced 2024 revenue to $2.63 billion from $2.67 billion and operating income to $362 million from $367 million.
Teladoc Health, Inc. (NYSE:TDOC) offers its services to consumers through its mental health platform BetterHelp and its broader Integrated Care platform. BetterHelp accounted for $1.1 billion of Teladoc Health, Inc. (NYSE:TDOC)’s $2.4 billion in revenue during the full year 2023, but the platform is struggling to attract customers. During the Q4 2023 earnings call management shared:
Turning to the BetterHelp segment, Revenue was $276 million in the fourth quarter, while adjusted EBITDA was $58 million. BetterHelp margins expanded 210 basis points over the prior year’s fourth quarter, which helped drive year-over-year adjusted EBITDA growth of 11% despite lower revenue.
While we’re pleased to deliver double-digit adjusted EBITDA growth at BetterHelp both for the quarter and the full year, revenue and margins were below our expectations in the quarter as we saw lower yields on marketing spend. Specifically, we experienced returns on our social media advertising spend that were below target in the second half of the year, which was a departure relative to the first half. We’ll speak to guidance in a moment, but our BetterHelp outlook assumes the lower yields experienced in certain channels in the second half of 2023 will persist and as a result will impact our year-over-year growth rates in the first half of 2024.
3. CRISPR Therapeutics AG (NASDAQ:CRSP)
Ark Investment’s Q4 2020 Investment Stake: $1.5 billion
Number of Q1 2024 Hedge Fund Investors: 27
Share Price Performance Since 2020 End: -64.72%
CRISPR Therapeutics AG (NASDAQ:CRSP) is one of the more revolutionary medical companies since it is one of the few and one of the earliest players in the genetic sequencing industry. Estimates suggest that the market for CRISPR gene editing technologies can grow at a compounded annual growth rate of 22.3% between 2022 and 2027 to be worth an estimated $9.2 billion at the end of the forecast period. CRISPR Therapeutics AG (NASDAQ:CRSP)’s revenue was $370 million in 2023, leaving it with quite a bit of room to grow. Key to CRISPR Therapeutics AG (NASDAQ:CRSP)’s success though is the broader biotechnology industry’s ability to commercialize treatments with its technology. These led to royalty payments, and one such payment came in Q1 from pharma giant Vertex Pharmaceuticals. Vertex’s Casgevy is one of the few sickle cell disease treatments in the world, and its maker paid CRISPR Therapeutics AG (NASDAQ:CRSP) $170 million in 2023 as a milestone payment. CRISPR Therapeutics AG (NASDAQ:CRSP) is eligible for another $130 million, and will also receive royalties from future treatments developed with its technology.
CRISPR Therapeutics AG (NASDAQ:CRSP) is a true Cathie Wood long term stock. Her firm first bought the shares in 2017 according to Insider Monkey’s data. Since then, it has grown the $206,000 stake to $555 million as of the latest quarter. Oppenheimer kept an Outperform rating on CRISPR Therapeutics AG (NASDAQ:CRSP)’s shares in May 2024 but cut the share price target to $95 from an earlier $102. The firm cited growing expenses as the basis for the reduction, but it was appreciative of the milestone payments.
2. Roku, Inc. (NASDAQ:ROKU)
Ark Investment’s Q4 2020 Investment Stake: $1.7 billion
Number of Q1 2024 Hedge Fund Investors: 39
Share Price Performance Since 2020 End: -81.85%
Roku, Inc. (NASDAQ:ROKU) is a new age consumer electronics and media company that seeks to leverage the growth in online streaming. It sells hardware that enables users to use its platform to stream television content. As a result, central to Roku, Inc. (NASDAQ:ROKU)’s story is the ability to make money from its platform. For the streaming media industry, this means that a handful of avenues are available to make money. Apart from recurring subscription fees, central to Roku, Inc. (NASDAQ:ROKU)’s success is a growth in the shift to streaming from traditional televisions. The greater this shift is, and the better deals that it can strike with advertisers, the more money Roku, Inc. (NASDAQ:ROKU) can make and lead to juicy gains for investors.
Roku, Inc. (NASDAQ:ROKU) is another classic Cathie Wood long term play. Her firm first bought the shares in 2019 according to Insider Monkey’s data when it acquired a $7 million stake. Since then, the stake has grown by more than 10x. O’keefe Stevens Advisory mentioned the firm in its Q1 2024 investor letter where it shared:
ROKU – An idea that would have seemed unthinkable just a few years back when low P/E or low multiple meant the stock was cheap. Roku is free-cash-flow positive, EBITDA breakeven, and GAAP Net Income unprofitable. Historically, investors tend to shy away from unprofitable businesses. Deeming them too risky. Roku has a $2B net cash position and is reinvesting in the business, grabbing Connected TV market share. Geographic expansion takes time and capital. They have a dominant share and have many tailwinds. Walmart’s acquisition of Vizio adds to the already heightened uncertainty. We can’t remember seeing a company with such “negative” sell-side coverage. 9 buys, 10 holds, and 4 sells. Nearly all reports discuss weighting for clarity, which is why the opportunity exists. Wells Fargo has the lowest price target at $45, or 26% downside. We see a reasonable case for a $100 stock in the near term and long term, owning a compounder with an attractive business model, secular tailwinds, and dominant market share that can translate into a desirable return over the next several years.
1. Tesla, Inc. (NASDAQ:TSLA)
Ark Investment’s Q4 2020 Investment Stake: $2.9 billion
Number of Q1 2024 Hedge Fund Investors: 74
Share Price Performance Since 2020 End: -15.87%
Tesla, Inc. (NASDAQ:TSLA) is one of Cathie Wood’s favorite stocks. It is the world’s largest pure play electric vehicle manufacturer, and along with making cars, the firm has a host of other products such as self driving, energy storage, and even robotics to target high growth industries. Yet, Tesla, Inc. (NASDAQ:TSLA)’s bread and butter are electric cars, and any turbulence in this market means that the stock ends up struggling. The past 12 month have been hard for Tesla, Inc. (NASDAQ:TSLA), as higher costs, supply chain problems, and growing competition in the cut throat Chinese electric market have weighed on investors’ minds. However, Tesla, Inc. (NASDAQ:TSLA) possesses key competitive advantages on the design and manufacturing fronts which enable it to utilize economies of scale to bring down costs and compete globally. Additionally, Chinese EVs have been recently the subject of tariffs in the EU, leaving the market open for Tesla, Inc. (NASDAQ:TSLA). Another catalyst to the stock can be the much awaited sub $25,000 electric vehicle, which when coupled with Tesla, Inc. (NASDAQ:TSLA)’s brand name could lead to a higher market share and allow it to solve the key problem of EVs being too expensive for mass adoption.
Having first bought the shares in 2016 when they were trading at roughly $16, Ark Invest was out with a bullish take on Tesla, Inc. (NASDAQ:TSLA) in June 2024. It shared that the launch of the Robotaxi could account for 90% of Tesla, Inc. (NASDAQ:TSLA)’s enterprise value by 2029 and electric vehicles could account for a quarter of revenue. Ark’s updated model shows a bear case share price target of $2,000 per share and a bull share price of $3,100. Baron Funds mentioned Tesla, Inc. (NASDAQ:TSLA) in its Q1 2024 investor letter. Here is what the firm said:
Tesla, Inc. designs, manufactures, and sells electric vehicles (EVs), related software and components, and solar and energy storage products. Shares fell 29.3% in the first quarter as the core automotive segment is facing headwinds due to a complex macroeconomic environment, factory shutdowns, growing competitive risks in China, and vehicle price reductions which are pressuring gross margins. During the first quarter of 2024, production was also negatively impacted by the Red Sea maritime supply- chain interferences, sabotage in a Tesla factory’s power supply in Berlin, and a factory closure for the launch of the refreshed Model 3. We remain shareholders. Tesla commenced delivery of its highly anticipated Cybertruck pickup, which features new technologies within the car and its manufacturing lines. Tesla also launched version 12 of its Full Self Driving product, which shows significant progress from prior versions and increases the probability that Tesla’s data collection at scale, and verticalized software and hardware approach will position Tesla as a leader in the future for autonomous driving and shared mobility. We also expect energy storage sales to continue to grow over the coming years as the adoption of renewable energy continues. Lastly, we believe Tesla’s core automotive segment will recover with the company remaining a leader in the EV market, which continues to expand with EVs still accounting for only around 10% of vehicle sales globally.
Even though Cathie Wood has held on to TSLA for dear life for years, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None.
