Over the last several years, Ark Invest CEO Cathie Wood has been one of the biggest bulls on electric vehicle company Tesla Inc TSLA. 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 (especially when adjusted for the five-for-one split that occurred in 2020).
The big question for investors now is whether Wood can strike magic again with a new price target on Tesla.
Over the last several years, Ark Invest has laid out several price targets for Tesla shares, factoring in items like full self-driving and robotaxis. A model previously laid out a price target of $500 by 2026.
On Thursday, Ark Invest laid out a new price target for Tesla shares. The ETF management company sees Tesla shares hitting $2,000 in 2027 and the company’s market capitalization hitting $4.4 trillion.
The bear-and-bull case for Tesla stock are $1,400 and $2,500 respectively for the same time period.
The new open-sourced model considers a number of factors like robotaxis, market share, gross margins and average selling prices. Factors not included in the model were Tesla’s balance-sheet strength, Dojo supercomputer and Optimus humanoid robot.
According to the model, the robotaxis, which are estimated to launch in 2024, are listed as one of the biggest drivers of Tesla’s future value, representing 58% of the company’s enterprise value and 45% of EBITDA. The model further notes that electric vehicles will make up 62% of the revenue for Tesla in 2027.
The new price target from the Cathie Wood-led firm comes on the heels of Tesla reporting first-quarter financial results and operating margins that saw mixed reactions from analysts.
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 flagship Ark Innovation ETF ARKK and in the Ark Autonomous Technology & Robotics ETF ARKQ, comprising 9.3% and 12.4% of assets in the funds respectively. Tesla is also the seventh-largest holding in the Ark Next Generation Internet ETF ARKW.
Related Link: Tesla Q1 Earnings Highlights: Revenue Beat, EPS In Line, Cybertruck Update, Model Y Bestselling Vehicle And More
Investing $1,000 in Tesla Today: Investors who believe in Ark’s future price target for Tesla might consider investing in the electric vehicle manufacturer today today.
While the company’s operating margins were down in the first quarter, CEO Elon Musk shared that Tesla may focus more on future revenue opportunities and take advantage of its aggressive pricing against electric vehicle rivals.
A $1,000 investment in Tesla stock could purchase 6.06 TSLA shares at the time of writing based on a price of $165.08.
The $1,000 investment in Tesla stock today would be worth $12,120 in 2027 if shares hit the $2,000 price target outlined by Ark Funds.
This represents a potential return of 1,112% over the next four years.
Hitting a market capitalization of over $4 trillion would make Tesla the most valuable company of all-time, which could have some being cautious with the price-target estimate. Apple became the first company to hit a market cap of $3 trillion back in 2020, and no companies currently have a market cap of over $2.7 trillion at the time of writing.
Read Next: If You Invested $1,000 In Tesla Stock At IPO, Here’s How Much You’d Have Today
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Image and article originally from www.benzinga.com. Read the original article here.