Cathie Wood’s ARK Invest predicts Tesla stock will surge 1,345% over the next five years. Elon Musk says it’s an ‘extremely challenging, but achievable’ target (2024)
Bill Gates once famously said people tend to overestimate the amount of change that can occur in one year, but underestimate the amount of change that can occur over 10 years. It’s a cliché, known as Gates’ law, that ARK Invest and its CEO, Cathie Wood, need to be true if their lofty price target for Tesla is to become reality.
ARK analysts, led by Tasha Keeney, put out a report detailing their latest bullish prediction for Elon Musk’s EV giant on Wednesday. It argues Tesla shares will skyrocket roughly 1,350% to $2,600 by 2029—and robo-taxis are key to the optimistic thesis. “ARK estimates that nearly 90% of Tesla’s enterprise value and earnings will be attributed to the robo-taxi business in 2029,” Keeney and her team wrote.
Of course, Tesla hasn’t launched a robo-taxi business just yet. But ARK says it’s all but guaranteed to roll out soon. “We believe that Tesla will launch a robo-taxi service within the next two years, and that the probability Tesla fails to launch a robo-taxi service within five years is de minimis,” Keeney and her team explained, noting that Tesla has said it will unveil its robo-taxi app and prototype at an Aug. 8 event.
But what if Tesla doesn’t expand its robo-taxi network in time, because of difficulties gaining regulatory approval or for any number of other reasons? Well, then ARK’s analysts are far less bullish. They say Tesla could launch a “human-driven” ride-sharing business to compete with the likes of Uber, but that wouldn’t boost share prices in the same way robo-taxis could. “While unlikely, if we were to eliminate the possibility of a robo-taxi network from our model, our price target would be ~$350,” Keeney and her team admitted Wednesday.
That means Tesla shares could surge 1,350% over the next five years—or a far less staggering 95%—and it all depends on the success of the robo-taxi business, at least according to ARK Invest and CEO Wood. However, the ARK Invest team doesn’t include this scenario in their bear case outlook, which still foresees Tesla shares rising to $2,000 by 2029.
ARK’s bullish outlook also features some serious vehicle production increases at Tesla. Keeney and her team expect the EV giant to raise production by 45% each year through 2029. In the first quarter, Tesla’s vehicle production fell 1.7% from a year ago to 433,000 as EV demand slowed. But ARK says the rollout of a robo-taxi business will lead to significant sales growth as robo-taxi “fleet owners” begin to buy Tesla’s new EVs. “Robo-taxis likely ease manufacturing scaling by simplifying vehicle designs as well as generating additional capital from highly cash-flow-generative rides,” they added.
While ARK’s latest forecast for Tesla shares may seem overly optimistic, Wood and her team have a track record of making prescient, out-of-consensus calls. In 2018, for example, Wood shocked Wall Street by predicting Tesla shares would surge 1,200% to $4,000 by 2023. At the time, the EV giant was struggling to scale the production of its Model 3, and Elon Musk noted in a conference call that Apple’s Tim Cook had even approached him about buying the company.
But Tesla ultimately made it through that dark time, and Wood’s seemingly wild prediction came true, with Tesla shares hitting the split-adjusted $4,000 equivalent in January 2021. Now, Wood is predicting another run of good form at Tesla, and she noted the outlook doesn’t even include any revenue from the potential release of Tesla’s Optimus personal robot, which could be substantial.
“Our research suggests that generalizable humanoid robots represent a ~$24 trillion global revenue opportunity at scale, ~50% in manufacturing. Should it decide to sell Optimus externally, Tesla could capture a significant share of this multitrillion-dollar market,” ARK’s analysts argued.
Tesla CEO Elon Musk also responded to ARK’s forecast on X Wednesday, calling it “extremely challenging, but achievable.”
It argues Tesla shares will skyrocket roughly 1,350% to $2,600 by 2029—and robo-taxis
robo-taxis
A robotaxi, also known as robot taxi, robo-taxi, self-driving taxi or driverless taxi, is an autonomous car (SAE automation level 4 or 5) operated for a ridesharing company.
are key to the optimistic thesis. “ARK estimates that nearly 90% of Tesla's enterprise value and earnings will be attributed to the robo-taxi business in 2029,” Keeney and her team wrote.
When Wood's ARK Invest fund issued its forecast for Tesla, the stock was trading at about $180 per share. While Wood expects Tesla stock to be worth $2,600 by 2029, Wood's team even suggests that in a more optimistic scenario, the stock could surge to $3,100.
These projections are based on various factors and assumptions, including Tesla's market performance, EBITDA margins, and the broader electric vehicle market. Where will Tesla stock be in 5 years? Analysts see Tesla's share price exceed $1,349 by the end of 2031.
Based on the updates delineated above, ARK's price target for Tesla is $2,600 per share in 2029. Our bear and bull cases suggest that Tesla could be valued between ~$2,000 and ~$3,100 per share in 2029.
Wall Street consensus also has 2024 Tesla earnings firmly below last year's level. That signals another year of earnings declines for this growth stock. Analysts currently expect Tesla earnings per share of just $2.24 in 2024, according to FactSet. That would be a 28% decline vs. $3.12 in 2023.
He forecasts Tesla stock to gain about 550% to hit $1,200 a share by 2030, and for SpaceX to triple in valuation over the same period, according to a recent interview conducted by Bloomberg. Baron runs the Baron Focused Growth Fund, which counted Tesla and SpaceX as its largest holdings as of December 31, 2023.
How Much Will Tesla Stock Be Worth in 10 Years? StockScan projects Tesla's stock could exceed $3,600 by 2035. This long-term outlook considers potential growth in production, technological advancements, and market expansion, though long-term predictions are inherently speculative.
According to reputable sources, Tesla's stock price is predicted to reach between $13,680 and $15,660 by 2040. This forecast is based on the assumption that the company will continue to innovate and expand its market share.
With its 3-star rating, we believe Tesla's shares are fairly valued compared to our long-term fair value estimate. In 2024, we forecast Tesla will see a far slower growth rate, with deliveries increasing just 10% to a little under 2 million, from a little over 1.8 million in 2023.
Based on 35 Wall Street analysts offering 12 month price targets for Tesla in the last 3 months. The average price target is $205.09 with a high forecast of $310.00 and a low forecast of $24.86. The average price target represents a -5.44% change from the last price of $216.90.
(The older targets are adjusted for Tesla stock splits.) The $2,000 target was 2026. The $1,000 target was for 2025. Target prices typically have some sort of embedded date in them.
The 33 analysts with 12-month price forecasts for Tesla stock have an average target of 206.94, with a low estimate of 24.86 and a high estimate of 310. The average target predicts a decrease of -8.50% from the current stock price of 226.17.
The electric vehicle maker has grown into a sizeable chunk of Cathie Wood's innovation ETF after an 80% rally. The big rebound in Tesla Inc. shares over the past few months has pushed the electric-vehicle maker to its highest-ever weighting in Cathie Wood's flagship $6.2 billion exchange-traded fund.
Based on short-term price targets offered by 35 analysts, the average price target for Tesla comes to $201.06. The forecasts range from a low of $24.86 to a high of $310.00. The average price target represents a decline of 11.87% from the last closing price of $228.13.
ARK's 2023 target price was $2,000 a share by 2027. That was up from $1,533 in 2022 and $1,000 in 2021. (The older targets are adjusted for Tesla stock splits.) The $2,000 target was 2026.
Conclusion: Is TSLA Stock a Good Buy or Sell? Tesla (TSLA) has an AI Score of 9/10 (Buy) because, according to an overall analysis, it has a probability advantage of +5.41% of beating the market (S&P500) in the next 3 months.
And I think there's a very good chance that a decade from now, Tesla will still be designing, manufacturing, and selling passenger vehicles to consumers across the world -- exactly what it does today. Don't be surprised if the vast majority of its revenue is derived from EVs in 2034.
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