- On June 13, 2024, Cathie Wood, CEO and CIO of ARK Invest, appeared on CNBC’s “Squawk Box” to share insights on Tesla Inc. (NASDAQ: TSLA) and ARK’s five-year price forecast for the stock.
- Wood began with a discussion on Tesla’s recent shareholder vote, particularly the approval of Elon Musk’s compensation package and the proposal to relocate Tesla’s legal domicile from Delaware to Texas.
- She expressed satisfaction with the strong support from institutional investors, emphasizing the long-term benefits for Tesla despite potential legal hurdles.
Explore Cathie Wood’s bold predictions for Tesla, highlighting ARK Invest’s projected price target and the anticipated impact of autonomous mobility on the company’s future.
ARK Invest Sets Ambitious Price Target for Tesla
During the interview, Wood elaborated on ARK Invest’s updated price target for Tesla, which stands at $2600 per share by 2029. This bullish projection is primarily driven by Tesla’s foray into the autonomous taxi market. According to Wood, this new platform is envisaged to operate on a Software-as-a-Service (SaaS) model, delivering substantial recurring revenue with each mile driven by Tesla’s autonomous vehicles.
The Potential of Autonomous Mobility
Cathie Wood articulated the vast potential of autonomous mobility, describing it as the most significant AI initiative globally. She highlighted the enhanced safety metrics of Tesla’s Full Self-Driving (FSD) technology, which ARK’s research suggests has resulted in fewer accidents per mile than conventional vehicles. This could mark a transformative shift in road safety and efficiency.
Regulatory Challenges and Public Sentiment
Despite the optimistic outlook, regulatory approval remains a critical obstacle. Wood noted a shift in the attitudes of public officials, including U.S. Secretary of Transportation Pete Buttigieg’s recent comments on the potential benefits of autonomous vehicles for road safety. This regulatory acceptance is vital for the success of Tesla’s autonomous taxi network, which Musk aims to have operational within the next couple of years.
Support from Shareholders and Future Projections
Elon Musk announced that the Tesla shareholder votes on his substantial $56 billion compensation package and the relocation of the company’s legal headquarters to Texas are both expected to pass by significant margins. This news appears to have positively influenced Tesla’s stock, which saw a 4% increase as of 10:34 a.m. ET on the announcement day.
ARK Invest’s Analytical Outlook
ARK Invest analysts have released a comprehensive report predicting that Tesla stock could reach an expected value of $2,600 per share by 2029. The analysis presents a range of possibilities, with a bullish case forecasting $3,100 per share and a bearish case estimating $2,000 per share. The model considers 45 independent variables to project various scenarios for Tesla’s future performance and stock valuation.
Robotaxi Business to Dominate Tesla’s Future Earnings
The report further indicates that by 2029, nearly 90% of Tesla’s enterprise value and earnings will derive from its robotaxi business, significantly overshadowing the revenue from its electric vehicle sales. It anticipates that electric vehicles will contribute only about 25% of total sales and approximately 10% of earnings. This projection underscores the potential profitability of the robotaxi sector, owing to its higher margins.
Conclusion
Cathie Wood’s insights paint a promising future for Tesla, driven largely by innovations in autonomous technology and strategic corporate decisions. As Tesla navigates regulatory landscapes and leverages technological advancements, the anticipated financial growth highlights significant long-term value for investors. The evolving landscape of autonomous mobility represents a pivotal shift that stakeholders will closely monitor in the years ahead.
