Cathie Wood’s ARK Invest Predicts Tesla Stock to Surge 1,300% by 2029 Despite Current Challenges

Cathie Wood’s ARK Invest Predicts Tesla Stock to Surge 1,300% by 2029 Despite Current Challenges

Tesla (TSLA), the world’s leading electric vehicle (EV) manufacturer, has generated substantial wealth for its shareholders since its initial public offering (IPO) in July 2010. With an impressive return of over 14,000%, TSLA stock has far outpaced the broader markets.

Currently, Tesla trades at 55% below its all-time high and boasts a market capitalization of $589 billion. Over the past two years, the company has faced macroeconomic challenges, including inflation and rising interest rates, which have dampened consumer demand for EVs. Increased competition and sluggish demand have also compelled Tesla to lower its vehicle prices multiple times, resulting in slimmer profit margins.

Despite these headwinds, Cathie Wood, a highly regarded investor on Wall Street, believes Tesla stock could skyrocket by more than 1,300% by 2029, making it a top investment choice in 2024. Let’s delve into the reasons behind this optimistic outlook.

ARK Invest’s Bullish Stance on Tesla

Cathie Wood’s investment firm, ARK Invest, recently released a report projecting that TSLA stock could reach $2,600 per share by 2029. This forecast includes a bear case price target of $2,000 and a bull case price target of $3,100, compared to the current price of $185.

ARK Invest’s model incorporates distributions for 45 independent inputs to simulate various potential outcomes for Tesla. Remarkably, the firm predicts that approximately 90% of Tesla’s enterprise value and earnings will come from its robotaxi business by 2029. The EV business is expected to contribute 25% to total sales and 10% to earnings.

ARK Invest anticipates Tesla will launch a robotaxi service within the next two years. If Tesla decides against the robotaxi initiative, ARK’s target stock price would significantly drop to $350.

EVs and the Optimus Project

In ARK’s expected value scenario, Tesla’s vehicle production is projected to grow 45% annually through 2029. Beyond this, the company’s ability to scale will depend on the opening of new factories. ARK suggests that robotaxis will facilitate manufacturing scaling by simplifying vehicle designs and generating income from ride services. The report also indicates that most robotaxis will be sold to fleet owners, streamlining Tesla’s sales process.

ARK Invest also noted that Tesla’s robotics business, Optimus, is expected to have a minimal impact on its price target in the near term. By the end of 2024, Optimus is anticipated to perform useful factory tasks. If Optimus can reduce labor hours by 10%, it could save Tesla $3 billion in manufacturing costs by 2029. Furthermore, the humanoid robots market could potentially grow into a $24 trillion industry, offering Tesla an extraordinary opportunity to accelerate its revenue growth.

Is Tesla Stock a Potential Goldmine?

ARK Invest’s highly optimistic projection hinges on the success of the robotaxi venture, which is expected to drive EV demand through 2029. A stock price of $2,600 would make Tesla the largest company in the world, with an estimated market cap of $8 trillion.

While this financial model may appear exaggerated, much will depend on Tesla’s forthcoming robotaxi event in August 2024. Elon Musk has previously struggled to meet his ambitious targets, as investors are still awaiting a fully autonomous EV. Although it’s risky to doubt Musk’s vision, a 1,329% increase in Tesla’s stock price seems highly improbable at this time.

Currently, out of 32 analysts covering TSLA stock, eight rate it as a “strong buy,” two as a “moderate buy,” 16 as a “hold,” and six as a “strong sell,” resulting in an overall “hold” consensus. The average target price for TSLA stock is $176.45, reflecting a discount of about 3% from its current trading price.