Cathie Wood Has New Price Target For Tesla Stock As Ark Models Nearly 1,230% Upside Over 4 Years

Tesla, Inc. TSLA bull Cathie Wood's Ark Invest on Thursday announced its updated valuation framework for the shares of the electric vehicle maker, a day after the stock plunged about 10%.

What Happened: Ark said its updated open-source Tesla model projects the stock hitting $2,000 in 2027, with the bear- and bull-case targets at $1,400 and $2,500, respectively.

Earlier this year, Ark issued a 2026 Tesla price target of $500, adjusting for the 3-for-1 split implemented in Aug. 2022 and removing the ride-hailing service from the valuation framework.

Ahead of this, in mid-April 2022, the firm announced a 2026 pre-split price target of $4,600 for the stock.

Key Driver: Tesla's Robotaxi business line is a key driver, contributing about 58% of expected enterprise value and 45% of expected EBITDA in 2027, analysts led by Tasha Keeney said. EVs would make up 62% of the revenues, they said.

Margins of the EV business would be substantially lower than Robotaxi’s revenue, Ark said. This is in line with Tesla CEO Elon Musk's comments on the earnings call that Tesla could sell its EVs for zero profit now and then yield "tremendous economics" in the future through autonomy.

See Also: Everything You Need To Know About Tesla Stock

Some of the assumptions that went into the modeling for 2027 were as follows:

• Volumes of 10.3 million to 20.7 million (bear- and bull-case scenario)
• ASP: $34,000 in bear-case and $26,000 under bull-case scenario
• EV Revenue: $346 billion under base-case and $528 billion in bull-case scenario
• Autonomous ride-hail: $200 billion to $613 billion
• EV gross margin: 34%-23%
• Total gross margin: 51%-52%
• Market cap: $4.44 trillion – $7.94 trillion
• Free cash flow yield? 4.60%-4.20%

Ark assumes late-2024 as the most likely timeframe for the launch of Robotaxis.

Musk said during the earnings call that Robotaxi is the generic name for Tesla's next-gen vehicle and it will come armed with Hardware 3. "So, there will be like a Model 3 or Model Y would be a Robotaxi, a robotic taxi," he said.

Ark said its model does not consider debt financing, Bitcoin BTC/USD, equity raise and balance sheet strength as value drivers for the stock.

Business opportunities not included in the model are Dojo training-as-a-service and Optimus humanoid robot, it added. The rationale is that the firm considers these businesses as value drivers over a longer time horizon and may not contribute significantly over a five-year investment time horizon.

In premarket trading on Friday, Tesla stock rose 1.39% to $165.25, according to Benzinga Pro data.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

Read Next: Cathie Wood Bottom Fishes Huge Tesla Stake After Wall Street Dumps Stock Over Elon Musk’s Price Cut Remarks