ARK Invest
- ARK Invest’s Cathie Wood made a monstrous bet in 2018, predicting that Tesla would reach $ 4,000 in five years, representing a potential increase of around 1,200% at the time.
- The decision to turn his head, which many doubted, came while Tesla was struggling to scale its production of the Model 3 and was facing a liquidity crisis.
- On Thursday, Tesla rose more than 7% and hit Cathie Wood’s $ 4,000 price target on a split-adjusted basis.
- Detailed below is where ARK Invest believes Tesla’s shares can go next.
- Watch the Tesla trade live here.
In 2018, ARK Invest’s Cathie Wood made a revolutionary call to Tesla: the stock would reach $ 4,000 in five years.
Wood’s call came as a surprise because it came at a time when Tesla was facing immense difficulties in increasing production of its popular Model 3, was constantly dealing with quality control problems and had an imminent liquidity crisis, which led some to believe that the company was on the verge of bankruptcy.
Even Tesla CEO Elon Musk recently said that during the “darkest days” of Model 3 production, he approached Apple’s Tim Cook about being acquired by the iPhone maker, but Cook did not accept the meeting.
At the time of the ARK forecast, Tesla’s shares were traded at around $ 300 per share, meaning that an increase to $ 4,000 would represent an upward potential of around 1,200%.
Wood doubled down on his call to Tesla in an open letter to Musk in August 2018, urging him not to go public after tweeting, “Guaranteed financing”
On Thursday, Tesla hit Wood’s target price, with the stock closing at $ 816, or $ 4,080 with a split adjustment. Last summer, Tesla executed a 5 to 1 stock split.
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Tesla’s meteoric rise came when the company successfully scaled up production of its Model 3. In 2020, Tesla missed its goal of delivering 500,000 units for just a few hundred vehicles, even in the midst of a pandemic that closed its production facilities. production in California for more than a month.
Other factors that helped boost Tesla’s shares by 743% in 2020 included its December addition to the S&P 500 index and investors giving a premium to electric vehicle manufacturers with a view to a Joe Biden presidency and its green energy agenda.
With Tesla meeting Wood’s target two years ahead of schedule, the company now has a $ 7,000 price target for Tesla, or a $ 1,400 adjusted split, representing a 72% upside potential from the close of Thursday.
“Based on our updated expectations for declining electric vehicle (EV) cost and demand, as well as our estimates for the potential profitability of robotaxis, our expected value per share for 2024 for TSLA is $ 7,000,” said the ARK analyst Sam Korus last year.
Tesla’s rise has consolidated Musk as the richest man in the world and the company is now the fifth most valuable company in the S&P 500, most recently surpassing Facebook.
But not everyone believes Tesla’s bullishness will last, with Big Short investor Michael Burry saying Tesla’s stock will implode just like the 2007 housing bubble.
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