Tesla's run has just started, says ARK Invest CEO
Talking to Bloomberg, ARK Invest CEO Catherine Wood said that the surge in Tesla (TSLA) stock has just begun. Her company also released a detailed report last week on how Tesla is expected to reach an eye-watering $7,000 per share price in the next five years assuming, of course, Tesla's Robotaxi and FSD plans come to fruition.
Above: ARK Investment CEO Catherine Wood explains Tesla's growth potential ahead (Source: Bloomberg)
When asked about the number of cars Tesla produces per year versus the company's current market cap (more than Ford and GM combined), the CEO of the investment firm replied:
Well, we just published a report with our long term forecast, the numbers have gone up dramatically... and yet, we think it's incredibly undervalued. And the reason... [we assumed] it would lose 1/3 of the market share it had in 2018 (17% global market share including China)... [once] the Tesla killers came into market, Audi, Porsche Taycan, and Jaguar. Well, guess what? It's share increased last year to 18%.
And if we're right, if we are right, 'This stock has only begun'.
According to Woods, the traditional car companies are unable (yet) to produce an electric car to effectively compete with Tesla. There are many factors at play — Tesla's software prowess, chip technology, etc. However, Woods points to batteries, citing (among other things) Big Auto's decision to go with lithium-ion pouch cells which continue to be more costly than Tesla's cylindrical cells. Thus, traditional automakers continue to sell their EVs at a loss.
Above: Beginning at 5 minutes and 41 seconds into the video, Ark Invest CEO, Cathie Woods, talks Tesla (YouTube: Bloomberg Markets & Finance)
Meanwhile, ARK Invest's research shows that within the next 18 months, the price of an electric vehicle (like-for-like categories) is going to drop below the internal combustion engine or gas-powered car for the first time ever. And afterwards, the price of EVs will continue to fall. The investment management firm estimates that in five years, one share of Tesla will be worth $7,000. The chart below shows the company's roadmap — assuming its bear, median, and bull cases.
Above: ARK Invest's 2024 Tesla share price to $7,000 roadmap. Click/Tap to open the chart in new tab (Source: ARK Invest)
In addition to Tesla's advantages in battery tech, the company also shows leadership in autonomous vehicle (AV) tech. With 14.2 billion miles of real-world driving data from Tesla's worldwide fleet of cars, the Silicon Valley automaker has no direct competition to speak of — the only other company that has significant driving data recorded is Waymo. Compared with Tesla, Waymo's 20 million miles of real-world driving data is like comparing an ant and a mammoth.
Twitter: Elon Musk
According to one of Elon Musk's latest tweets, the Tesla fleet is soon going to soon have over a million vehicles worldwide. Therefore, with each and every vehicle sending driving data back to Tesla's neural network, the amount of data Tesla will be able to gather is going to grow exponentially.
Considering Tesla's edge in EV and AV tech, is Ark Invest right about Tesla's future? Perhaps. Or, maybe there's more to it. To that end, another firm, Loup Ventures, has identified three reasons Tesla is winning over Wall Street.