Key Points
Cathie Wood's Ark Invest bought shares in Archer Aviation, CoreWeave, and Tesla on Tuesday.
Archer Aviation took the largest hit, down 11% after posting disappointing quarterly results.
The three stocks are trading 21% to 61% below their 52-week highs.
Tuesday wasn't a good day for Archer Aviation(NYSE: ACHR), CoreWeave(NASDAQ: CRWV), and Tesla (NASDAQ: TSLA). The three stocks fell between 3% and 11% on a sluggish day for growth stocks. And Cathie Wood wasn't just watching. She was buying.
The co-founder CEO of Ark Invest added to all three positions during Tuesday's slide. Is she making a mistake, or is this an opportunity to add to some of her high-conviction investments? Let's take a closer look at all three of these volatile investments.
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1. Archer Aviation
Archer Aviation stock fell 11% on Tuesday, after the company posted fourth-quarter results the night before. That the rising star in the emerging market for electric vertical takeoff and landing (eVTOL) aircraft tumbled on fresh financials would be comical if it didn't mean real paper losses for investors.
Archer is still a pre-revenue company. Operating expenses are rising as it ramps up its fleet of Midnight aircraft and its test flight program. There will always be concerns about cash burn, but this isn't a stock that should be moving sharply on short-term results. As long as its plan is still on track -- and Archer continues to target its first passenger flights to take place later this year -- headlines and not income statement lines are what should be moving the shares. Archer shares have fallen 54% from their October high.
Buying or selling Archer isn't a play for what happens this quarter or even this year. Analysts have ambitious revenue growth targets for the next few years:
- 2026: $15 million.
- 2027: $147 million.
- 2028: $534 million.
- 2029: $1,550 million.
In the defense of Archer bears, these projections have inched lower in recent weeks. The consensus was for Archer to hit $1.7 billion by 2029. Forecasts for these next three years have been cut roughly in half.
There will be turbulence for the high-end air taxi service. There will also be concerns for how large the addressable market will be for expensive short-distance flights on aircraft with capacity for a pilot and just four passengers. But there are bullish catalysts, too. The U.S. Air Force is exploring the role that Archer's Midnight aircraft can play in military operations. Archer may even become a household name in two years, when it steps up as the official air taxi provider for the 2028 Olympic Games in Los Angeles. Absent meaningful headlines along the way, you can't blame Wood for adding to her position when the company takes a hit on earnings.
2. CoreWeave
It's been a wild ride for CoreWeave investors. The hyperscaler went public at $40 less than a year ago. It jumped to $187 shortly after its IPO, as a gear play for the AI revolution and the resource-intensive workloads that are being generated.
CoreWeave is still growing. Revenue has at least doubled in each of its first three quarters as a public company. But that hasn't been enough to support the stock's buoyancy.
CoreWeave stock has slid more than 60% from last year's peak, but it's still a great story worth watching. CoreWeave was started by a bunch of hedge fund traders who decided to load up on GPUs as a way to mine crypto on the side. After a prolific crash for digital currencies, they shifted gears to support data centers. With demand still booming, analysts see revenue more than doubling again in 2026.
3. Tesla
Tesla is the largest holding across Ark's combined ETFs. Wood's firm owns more than $1 billion of Tesla stock. She added to her largest position on Tuesday.
A lot is happening at Tesla these days. It just nixed its two priciest car lines, shifting those production resources to build out its autonomous humanoid Optimus robots and its Cybercab offering. There's a lot riding on the success of the two ventures, but betting against Elon Musk hasn't typically worked out for the naysayers over the long haul. Even in this difficult market in which many growth icons have been pummeled, Tesla stock is barely 20% below its recent all-time high.
Despite the end of the $7,500 tax credits for many electric-vehicle purchases in the fall of last year and the discontinuation of its two oldest models, analysts still see 8% top-line growth in 2026. They also see Tesla's profitability expanding. With the shift to home robotics and expected improvements in its autonomous-driving platform, this might not be a bad year for Tesla after all.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
