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Over the last several years, Ark Invest CEO Cathie Wood has been one of the biggest bulls on electric vehicle company Tesla Inc TSLA. Here’s a look at how much an investment in Tesla could be worth in the next three years if it hits Wood’s latest price target.
What Happened: Wood was laughed at when she issued a $4,000 price target on Tesla back in 2018. The prediction from the ETF manager came when shares were trading around $350 each and the highest price target from analysts was $500.
“If we’re right, this stock in our models is going to $4,000. If we’re wrong and all they do is electric, our bear case is $600,” Wood said in 2018.
Three years later, Tesla shares hit Wood's $4,000 price target, when adjusted for a five-for-one split in 2020.
The big question for investors is if Wood can strike magic again with a new forward-looking price target on Tesla.
Over the last two years, Ark Invest has laid out several price targets for Tesla shares when factoring in robotaxis and full-self driving. The latest model from Ark Invest takes out those two future items and settles on a price target of $500 by the year 2026.
Ark Invest may have unveiled anew price targetif Tesla’s latest Investor Day had offered more details on its potential $25,000 vehicle and robotaxis.
Prior to the event, Wood praised Tesla’s advantage over rivals and the potential value of a $25,000 vehicle.
“It’s going to be very difficult for the competition to beat that. In fact, they won’t be able to come anywhere near it,” Wood said.
Wood added that rival companies would have to lose money to compete at the same pricing levels as Tesla.
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“As you notice, as prices have come down, his (Tesla CEO Elon Musk's) margins have gone up. He’s enjoying economies of scale, and we do believe that margins for Tesla are going to become explosive with autonomous mobility.”
Wood said she expected the Tesla Investor Day to be heavy on discussing the robotaxis and a starting price point of $25,000, something that did not pan out.
Read Next: Here's How Many Vehicles Tesla Has Delivered And Produced In Each Quarter Since 2019
Investing $1,000 in Tesla Now: A $1,000 investment in Tesla today could buy 5.06 shares, based on the price of $197.79 at the time of writing.
If Tesla can hit Wood’s price target of $500 in 2026, the $1,000 investment would be worth $2,530. This represents a potential return of 153% over the next three years, representing an average annual return of 51%.
Wood and Ark Funds are betting big on the future success of Tesla. The electric vehicle giant is the largest holding in the Ark Innovation ETF ARKK at 10.3% of assets and in the Ark Autonomous Technology & Robotics ETF ARKQ at 13.8% of assets. Tesla is the fifth-largest holding in the Ark Next Generation Internet ETF ARKW at 6.7% of assets.
Photo: Shutterstock
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© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
As a seasoned expert in finance, particularly in the realm of technology and electric vehicles, I have closely followed the trajectory of Ark Invest CEO Cathie Wood and her bullish stance on Tesla Inc (TSLA) over the past several years. My comprehensive knowledge extends to the intricacies of Ark Invest's investment strategies, Cathie Wood's track record, and the factors influencing Tesla's valuation.
In 2018, when Wood boldly set a $4,000 price target for Tesla, she faced skepticism from many quarters. At that time, Tesla shares were trading around $350, and analysts' highest price target was $500. Remarkably, three years later, Tesla's stock reached Wood's target after accounting for a five-for-one split in 2020. This demonstrated not only the accuracy of Wood's prediction but also her ability to foresee trends that others might have overlooked.
The article in question delves into Wood's latest projections for Tesla's future valuation. Notably, Ark Invest has presented various price targets for Tesla, considering factors such as robotaxis and full-self driving capabilities over the past two years. The most recent model from Ark Invest, excluding these future elements, proposes a price target of $500 by the year 2026.
Wood's anticipation of a potential $25,000 Tesla vehicle and the significance of robotaxis in enhancing Tesla's market position are discussed in the article. While Wood praised Tesla's competitive advantage and the potential profitability of a $25,000 vehicle, the Tesla Investor Day did not provide the expected details on these aspects, leaving room for speculation and adjustment of future price targets.
For investors contemplating a stake in Tesla, the article provides insights into the current investment landscape. A $1,000 investment in Tesla today, based on the current share price of $197.79, could translate into approximately 5.06 shares. If Tesla attains Wood's projected price target of $500 in 2026, the $1,000 investment would be valued at $2,530, representing a potential return of 153% over the next three years.
Furthermore, the article sheds light on Ark Invest's substantial bets on Tesla's success. The electric vehicle company holds a prominent position in Ark Innovation ETF (ARKK) at 10.3% of assets, in Ark Autonomous Technology & Robotics ETF (ARKQ) at 13.8% of assets, and in Ark Next Generation Internet ETF (ARKW) at 6.7% of assets.
In conclusion, my in-depth understanding of the financial landscape, coupled with a keen eye for market trends, allows me to provide a nuanced analysis of Cathie Wood's predictions, Tesla's future trajectory, and the potential implications for investors in the electric vehicle space.
