Ardent Tesla supporter Cathie Wood expects electric carmaker’s shares to hit US$3,000 by 2025

Ark rates Tesla’s chances of achieving fully autonomous driving within five years at 50 per cent, which could provide a boost to its planned robotaxi service
According to Ark Invest Management’s new model, in the best case scenario, Tesla could reach US$4,000 per share in 2025, and in the bear case, US$1,500

Tesla

Bloomberg

Published: 1:55pm, 21 Mar 2021

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Cathie Wood’s Ark Invest Management expects Tesla stock to hit US$3,000 by 2025, up from its current price of US$655. At that price, the company would be worth almost US$3 trillion, based on the number of shares outstanding.

Ark expects there is a 50 per cent chance of Tesla achieving fully autonomous driving within five years, which could allow the company to scale its planned robotaxi service quickly, according to a Friday note on Ark’s website.

It also added Tesla’s insurance business into its model, believing the offering could be rolled out to more states in the next few years with better-than-average margins, thanks to “highly detailed driving data” the company collects.

Wood has been among Tesla’s most ardent supporters, holding large stakes of the company in her flagship fund. When Tesla shares saw a pullback in February, she bought more.

Cathie Wood’s Ark Investment Management holds large stakes of Tesla in her flagship fund. Photo: Bloomberg

According to Ark’s new model, in the best case scenario, Tesla could reach US$4,000 per share in 2025, and in the bear case, US$1,500. The company forecasts Tesla’s unit sales to be between five million and 10 million vehicles in 2025, assuming increased capital efficiency.

The US$3,000 target is far higher than any analyst who covers the company, the highest being US$1,200 among estimates compiled by Bloomberg. Fuelled by zealous supporters, Tesla shares rose more than 740 per cent last year, the best performance on the S&P 500. Elon Musk, its chief executive, became the richest person in the world in January, before Jeff Bezos reclaimed the title.

Analysts have speculated about the prospect that Tesla will launch a robotaxi service since at least 2015, but there is little indication its technology is close to making this possible anytime soon. Tesla recently told California authorities that human drivers will still need to constantly supervise a new city streets function within its “full self-driving” suite of features sold as part of its Autopilot package.

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As for the company’s insurance product, that began in August 2019 and is currently available only in California. The company includes vehicle insurance revenue within its “services and other” category, along with after-sales service, sales of used vehicles and retail merchandise. Last year, all of that business combined was about 7 per cent of total revenue.

Ark’s model did not incorporate Tesla’s utility energy storage or solar business, nor did it consider future price fluctuations for Tesla’s bitcoin holdings.

Barron’s reported the price target earlier.

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