Benzinga - by Chris Katje, Benzinga Staff Writer.
Ark Invest CEO Cathie Wood is known for her price predictions about electric vehicle company Tesla Inc (NASDAQ:TSLA), after her 2018 bullish prediction came true years later.
Wood recently shared a new price prediction for Tesla. Here’s a look at the potential future gains for investors who follow Wood into the EV stock.
Following Wood Into Tesla: Wood recently announced a $2,600 price target for Tesla, raising the bar from a previous price target of $2,000 for the electric vehicle stock.
Ark Invest has a price target of $2,600 for Tesla by the year 2029 with a bear case price target of $2,000 and a bull case of $3,100.
With Tesla shares trading at $182.58 at the time of writing, an investor could purchase 0.5477 shares with $100 today.
Here's a look at how much the $100 could be worth in 2029 if Wood's various price targets come true:
- $2,000 Bear Case: $1,095.40, +995.4%
- $2,600 Base Case: $1,424.02, +1,324.0%
- $3,100 Bull Case: $1,697.87, +1,597.9%
Keep in mind that the average return of the S&P 500 Index is around 10.5% annually since the fund's 1957 inception. The price target from Wood would mark a sizable outperformance to historical stock index returns.
Related Link: EXCLUSIVE: Cathie Wood Tells Benzinga Why Tesla Should Trade As A Tech Stock
Why It's Important: The new price target is based on several factors, with the majority of the price target coming from Tesla's robotaxi ambitions.
"ARK estimates that nearly 90% of Tesla's enterprise value and earnings will be attributed to the robotaxi business in 2029," the new open-source model reads.
Aside from the new price targets in the thousands of dollars, Ark also lists a price target of $350 for Tesla if it eliminates the robotaxi network from the model, stressing the importance of this future catalyst.
The new price target forecast model breaks down Tesla's 2029 revenue as being 63% from robotaxis and 26% from electric vehicles, with the rest coming from items like insurance and energy storage.
Ark Invest estimates that Tesla could have revenue of $1.2 trillion in 2029 and EBITDA of $440 billion. The prediction assumes that Tesla will sell 5.8 million electric vehicles in 2029.
"Tesla plans to unveil its dedicated robotaxi vehicle in August 2024. While Tesla could transform its current fleet into robotaxis, we believe a custom-built CyberCab reflects increased confidence that its autonomy software will allow Tesla to scale the robotaxi business."
The new Ark Invest price target does not include any impact from the Tesla Semi, Tesla Supercharging network, FSD licensing or AI-As-A-Service. The price model includes minimal results from the Optimus bot.
"(Tesla's) business model should transform from one-off vehicle sales to a recurring revenue base as every car becomes an AI-powered cash flow generation machine."
Wood's new price targets would take Tesla to a market capitalization of between $7 trillion and $10.9 trillion and the title of the world's most valuable company.
Tesla CEO Elon Musk recently highlighted the potential value of the robotaxi business and Optimus bot as being the catalysts that could make Tesla the most valuable company in the world and worth north of $30 trillion.
Many laughed at Wood when she made her bullish $4,000 price prediction. Years later, the stock was north of that level on a price adjusted value. Wood continues to bet heavily on Tesla with the Ark Innovation ETF (NYSE:ARKK), Ark Next Generation ETF (NYSE:ARKW) and Ark Autonomous Technology & Robotics ETF (BATS:ARKQ) counting Tesla as one of their top holdings.
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