ARK Invest has released a new Tesla research. In this new model, ARK says Tesla can reach $2,000 per share by 2027. However, this is ARK's base case scenario, in the firm's bull case, ARK says Tesla can reach more than $2,400 per share or a $7.9 trillion market cap.
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ARK Invest, the exchange-traded fund (ETF) run by Cathie Wood is famous for its bullish predictions about Tesla. Back in January 2020, ARK predicted Tesla’s stock will 10X to $460 per share by 2024 ($7000 before the 15-to-one stock split). The price target was the highest among all financial firms that followed Tesla.
At the time, most thought ARK’s prediction was laughable. However, at its highest closing price on November 5, 2021, Tesla stock was almost 9X its price since ARK released its report. Currently, Tesla stock has given up some of its gains and sits at 3.5X its January 2020 price.
And on April 2022, taking into consideration the run-up in Tesla’s stock price and the company releasing the beta version of its full self-driving software, ARK released a new Tesla prediction. In the new research released last year, ARK gave Tesla a 2026 price target of $1500 per share or a $5 trillion market cap.
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This was ARK’s base case prediction for Tesla’s stock price however, the firm also gave a bull case of $1,900 per share ($6.1 trillion market cap) and a bear case of $1,000 per share ($3.1 trillion market cap).
However, it has been a little more than a year since ARK’s last Tesla research, and late last night ARK has released their latest Tesla model. In the new research, ARK has pushed their Tesla prediction by one year to 2027.
However, for that one-year push, ARK Invest researchers have also increased their Tesla price target to $2,000 per share by 2026. This is ARK’s base case however, the fund has also provided a bull case of $2,400 per share ($7.9 trillion market cap) and a bear case of $1,400 per share ($4.4 trillion market cap).
Even in their worst-case scenario, ARK predicts Tesla’s share price will grow almost 9 folds from its Thursday closing price of $163 per share. In this scenario, similar to last year’s research, ARK predicts Tesla will achieve level 5 self-driving and launch an autonomous robotaxi service.
In ARK’s both bearish and bullish scenarios, the firm predicts Tesla will launch an autonomous robotaxi service. However, the difference between the 2 scenarios is that in the bearish one, Tesla will launch the service closer to the 2026 date, and in the bullish scenario, Tesla will launch the service in Q4 2023.
In the bearish scenario, ARK predicts Tesla will have a mix of human-driven ride-hailing service and autonomous robotaxis, fetching the EV maker $200 billion & $54 billion per year, respectively. ARK also predicts Tesla will grow the number of vehicles it sells every year at a compounded rate of 50% per year. This will mean a 2027 annual production capacity of 10.3 million vehicles.
All this coming true by 2027 will be amazing for Tesla however, ARK’s bullish prediction gets even better. In their bullish prediction, ARK believes Tesla will be able to produce 20.7 million vehicles a year by 2027. Of the 20.7 million vehicles, ARK expects 60% to go into the ride-hailing business.
In this bull scenario, ARK expects Tesla to generate $528 billion from vehicle sales and $613 billion from autonomous robotaxi revenue. ARK predicts a 23% gross margin for vehicle sales and an 80% gross margin for the autonomous robotaxi service. In this scenario, ARK predicts Tesla’s share price will rise to $2,400 per share or a $7.9 trillion market cap.
ARK’s bear and bull cases are tuned to the 25th and 75th percentile Monte Carlo distribution, respectively. And the firm has taken an average of over 1 million simulations as its base case. In ARK’s base-case analysis, the firm believes Tesla will have autonomous robotaxi service and will sell between 10 and 20 million vehicles a year.
In this scenario, ARK predicts, that by 2027, Tesla will be worth $2,000 per share or around a $6.3 trillion market cap. For now, ARK doesn’t include Tesla's humanoid robot businesses in its model.
Although incredible to imagine a future where Tesla achieves all of ARK’s predictions, as of now, it’s impossible to predict all the necessary steps Tesla will need to take to achieve this outcome. However, we will be sure to keep you posted as Tesla hits more and more of ARK’s milestones. Until then make sure to follow our site torquenews.com/Tesla regularly for the latest updates.
So what do you think? Do you think ARK’s prediction is likely to come true? Or do you think it’s unrealistic and there is no chance Tesla will hit those numbers? Also, do you think it’s a mistake that ARK has left Tesla’s humanoid robot businesses out of their prediction? Let me know your thoughts in the comments below.
Image: Courtesy of Tesla
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Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.
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