Tesla (TSLA) stock is down more than 30% so far in 2024, but Ark Invest CEO Cathie Wood thinks "now is not the time to run for the hills." In fact, Ark has been buying the stock and thinks it could rise to $2,000 per share in the next five years, representing an increase of more than 1,000% from today's levels.
"Autos, in the future, will be electric," Wood said in a recent interview with CNBC. "We believe in five years, 75% to 85% of all sales will be electric."
And Tesla is not just an auto company, Wood told CNBC. It epitomizes three technologies – robotics, energy storage and artificial intelligence.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
When CNBC asked what Tesla would be worth in five years, Wood confidently said $2,000 per share.
The $2,000 per share figure is not new, either. In April 2023, Ark Invest published its valuation model for Tesla with the same price target and the expectation of reaching it by 2027. It also revealed a "bull case" target of $2,500 per share, which had a 25% probability, and a "bear case" target of $1,400 per share, also with a 25% probability.
Robotaxis are key to Tesla stock's growth
The key driver of Ark's investment thesis is Tesla's prospective robotaxi business, which it thinks could represent 44% of the $1.02 trillion in revenue, 64% of the $354 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) and 67% of the $6.1 trillion enterprise value it expects Tesla to reach in 2027.
Ark's price targets rely heavily on the anticipated launch of the robotaxi business, "with late 2024 as the weighted average of all cases," it said.
"With a robotaxi platform, Tesla should be able to generate earnings from both the vehicle sale and a recurring ride-hail revenue stream, which ARK believes could generate software-like margins," Ark said in its valuation model. "As Elon Musk has phrased it, autonomous ride-hail ‘probably will be the biggest asset value increase in history.'"
If the robotaxi business does not launch in the near term, Ark may have to revise its target date for reaching the $2,000 per share price target.
As a point of comparison, the average target price of the 47 analysts covering Tesla stock that are tracked by S&P Global Market Intelligence is $196.64.
Related content
-
Original Medicare vs Medicare Advantage Quiz: Which is Right for You?Quiz Take this quick quiz to discover your "Medicare Personality Type" and learn whether you are a Traditionalist, or a Bundler.
-
Ask the Editor: Capital Gains and Tax PlanningAsk the Editor In this week's Ask the Editor Q&A, Joy Taylor answers questions on capital gains tax rates and end-of-year tax planning
-
Time Is Running Out to Make the Best Tax Moves for 2025Don't wait until January — investors, including those with a high net worth, can snag big tax savings for 2025 (and 2026) with these strategies.
-
Time Is Running Out to Make the Best Moves to Save on Your 2025 Taxes
Don't wait until January — investors, including those with a high net worth, can snag big tax savings for 2025 (and 2026) with these strategies.
-
4 Smart Ways Retirees Can Give More to Charity, From a Financial AdviserFor retirees, tax efficiency and charitable giving should go hand in hand. After all, why not maximize your gifts and minimize the amount that goes to the IRS?
-
I'm an Insurance Pro: If You Do One Boring Task Before the End of the Year, Make It This One (It Could Save You Thousands)Who wants to check insurance policies when there's fun to be had? Still, making sure everything is up to date (coverage and deductibles) can save you a ton.
-
Small Caps Hit a New High on Rate-Cut Hope: Stock Market TodayOdds for a December rate cut remain high after the latest batch of jobs data, which helped the Russell 2000 outperform today.
-
What Investors May Face in the New Year: InterviewKeith Lerner, the chief market strategist and chief investment officer for Truist Wealth, speaks with Kiplinger.
-
3 Year-End Tax Strategies for Retirees With $2 Million to $10 MillionTo avoid the OBBB messing up your whole tax strategy, get your Roth conversions and charitable bunching done by year's end.
-
'Politics' Is a Dirty Word for Some Financial Advisers: 3 Reasons This Financial Planner Vehemently DisagreesYour financial plan should be aligned with your values and your politics. If your adviser refuses to talk about them, it's time to go elsewhere.
-
For a Move Abroad, Choosing a Fiduciary Financial Planner Who Sees Both Sides of the Border Is CriticalWorking with a cross-border financial planner is essential to integrate tax, estate and visa considerations and avoid costly, unexpected liabilities.
