For many years, Ark Invest CEO Cathie Wood has been one of the biggest bulls on electric vehicle company Tesla Inc TSLA, one of her top holdings in her ETFs.
Here's a look at how much an investment in Tesla could be worth in the next three years if it hits Wood's latest price target.
What Happened: Back in 2018, Wood was laughed at when she issued a $4,000 price target on Tesla. The prediction from the ETF manager came when shares were trading around $350 each and the highest price target from analysts at the time was $500.
"If we're right, this stock in our models is going to $4,000. If we're wrong and all they do is electric, our bear case is $600," Wood said in 2018.
Three years later, Tesla shares hit Wood's $4,000 price target, adjusted for the five-for-one split that occurred in 2020.
Investors are now wondering if Wood can strike magic twice with her new bullish price targets for Tesla.
Ark Invest has laid out several price targets for Tesla over the years, factoring in items like full self-driving and robotaxis.
The newest price target for Tesla shares for Tesla came in April 2023, with a call for the stock price to hit $2,000 in 2027 and the company's market capitalization to hit $4.4 trillion.
The bear-and-bull case for Tesla stock from Ark Invest are $1,400 and $2,500, respectively, for the same time period.
The open-sourced model considers several factors such as robotaxis, market share, gross margins and average selling price. Factors not included in the model were Tesla's balance-sheet strength, Dojo supercomputer and Optimus humanoid robot.
In an interview with Benzinga, Wood said analysts and investors may be getting part of the Tesla trade wrong if they're valuing the company only as an automotive stock.
"Tesla, because of its positioning with AI, it is the only auto company or tech company that has designed its own chip for autonomous driving," Wood said.
Wood added that Tesla having its own chips and pushing into autonomous vehicles is important for the company's future valuation.
"This is not an auto play. This is an autonomous taxi platform play with software-as-a-service like margins."
Wood also said the launch of the Cybertruck electric pickup truck could expand the truck market and help Tesla.
Ark remains a Tesla bull, putting its money where its mouth is with large holdings of Tesla stock across the company's funds. Tesla is the largest holding in the Ark Autonomous Technology & Robotics ETF ARKQ comprising 11.7% of the assets in the fund. Tesla is also the second largest and fifth holding in the Ark Innovation ETF ARKK and Ark Next Generation Internet ETF ARKW, comprising 8.1% and 5.4% of assets, respectively.
Related Link: EXCLUSIVE: Cathie Wood Breaks Down $2,000 Tesla Price Target With Benzinga
Investing $1,000 in Tesla Today: Investors who believe in Ark's future price target for Tesla might consider investing in the electric vehicle company today.
A $1,000 investment in Tesla stock could purchase 4.65 TSLA shares based on a price of $215.15 at the time of writing.
The $1,000 investment in Tesla stock would be worth the following if the price targets laid out by Ark Funds for 2027 come true.
$1,400 price target: $1,000 today worth $6,510, +551%
$2,000 price target: $1,000 today worth $9,300, +830%
$2,500 price target: $1,000 today worth $11,625, +1,062.5%
Photos: Cathie Wood, Ark Invest; Tesla, Unsplash
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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