Why Ark Thinks Tesla’s Stock Will Quadruple to $3,000

Why Ark Thinks Tesla’s Stock Will Quadruple to $3,000
Andrew Rummer

almost 3 years ago2 mins

Mentioned in story

Ark Invest, the investment firm founded by Cathie Wood that's made its name from optimistic forecasts on Tesla’s shares, doubled-down on that bullish bet over the weekend.

Shares in the electric vehicle (EV) maker will surge to $3,000 by 2025, according to a report on Friday. That’s more than quadruple the current price, even after Tesla climbed 5% to $690 on Monday. The prediction is well above the average Wall Street price target of $634, although – as you can see from the chart above – analyst targets (in pink) have often lagged behind Tesla’s storming share price (in blue). 

Ark has gone from obscurity to one of the best-known names in finance over the past year after Tesla’s meteoric rise validated a series of aggressive price targets it had put on the stock. Its Ark Innovation exchange traded fund (ETF) has become one of the world’s most popular investments and the firm’s big-picture approach to stock picking has become a poster-child for the tech-fueled bull market that began last March. 

After setting a pre-split price target of $1,400 in January 2020, Ark has now increased that further to $3,000 – which would give the automaker a market value of almost $3 trillion. To get to that number, Ark estimates Tesla will sell between 5 and 10 million vehicles in 2025. That compares with a projection from BloombergNEF that 8.5 million electric cars will be sold that year in total – from all brands, not just Tesla. Ark also assumes there’s a 50% chance Tesla develops fully autonomous self-driving cars by 2025 and builds a robotaxi business that accounts for half of Tesla’s market value.

Pie charts of Tesla's predicted finances
Source: Ark Invest

In a follow-up report on Monday, Ark was dismissive of Volkswagen’s high-profile push into EVs, saying the German company’s “old world DNA” means it’s only planning for linear rather than exponential growth. “In an exponential world, companies thinking linearly could be left behind,” Ark reckons. 

It will be fascinating to see if this bullish call on Tesla – which is already attracting ridicule from some – will prove as correct as Ark’s previous projections.

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