A major investor expects Tesla shares to rise to $2,600

A major investor expects Tesla shares to rise to $2,600

ARK Investment Management’s Cathie Wood says robotaxis could account for 90% of Tesla’s business

On the eve of Tesla’s annual meeting — where shareholders will either rebuke or reward CEO Elon Musk — ARK Investment Management is giving a jaw-dropping prediction of where the stock will be in just five years.

Tesla stock is currently trading at about $170 per share, and peaked at about $360 a few years ago. By 2029, Tesla bull Cathie Wood’s ARK expects value to climb more than 1,400% to $2,600 per share, according to a new report from the firm.

ARK on Wednesday also suggested that a bullish estimate would put the stock at $3,100 per share, giving it a 25% chance of occurring. A bearish estimate puts the stock at $2,000 per share, which it also says has a 25% chance of happening.

Although Tesla has been known as an electric vehicle company, it’s been trying to rebrand itself as more of a tech company than an automaker. Keeping with that, ARK says just a quarter of sales and about 10% of Tesla’s earning potential in 2029 will be from the EV business.

Rather, 90% of Tesla’s value and earnings will be attributable to its robotaxis business, which has yet launch. On August 8, Tesla will host a robotaxi event that analysts generally view as more aspirational in nature, as opposed to a product launch. Musk has been promising that Tesla electric vehicles will be able to operate completely independently of a driver for about a decade.

“We expect Tesla to show a robotaxi concept on Aug. 8 and perhaps an accompanying app, and to reveal more about its expected business model,” JPMorgan analyst Ryan Brinkman said in a Tuesday research note. “But we do not expect material revenue generation likely for years to come.”

JPMorgan, citing conversations with Tesla’s investor relations leader Travis Axelrod, believes that a self-driving car will be launched by 2027 on a next-generation platform that will be cheaper than Tesla’s current offerings. Axelrod said the company believes its current approach is the “most scalable way forward” and that its eventual robotaxis will be cheaper than its current vehicles, with costs potentially falling as low as $20,000 per vehicle.

ARK said that if a Tesla robotaxi network isn’t operational by 2029, its price target would be lowered to around $350. It also expects that Tesla could launch a human ride-hail service in that case, similar to Uber and Lyft.

Tesla has discussed the potential for customers who purchase a vehicle equipped with Full Self-Driving to offer their vehicles for use in its potential robotaxi network. Currently, the technology requires human supervision.

Leave a Reply

Your email address will not be published. Required fields are marked *

Pin It on Pinterest