Cathie Wood's Ark Invest sees Tesla reaching $3,000 per share by 2025. Here's a breakdown

Published Sun, Mar 21 20215:33 PM EDT

Cathie Wood's Ark Invest just made a long-awaited, striking call on Tesla that projects shares of the Elon Musk-led electric carmaker more than quadrupling by 2025. Ark Invest released its Tesla price target of $3,000 per share by 2025. The new target implies a gain of more than 358% in the next four years, based on Tesla's closing price of $654.87 per share on Friday. Last year, Ark Invest estimated that Tesla's share price would hit $7,000 per share, or $1,400 adjusted for its five-for-one stock split, by 2024. Now, the firm sees the stock reaching $3,000 per share by 2025 in its base case, and reaching $4,000 per share in its bull case. Wood's bear case still sees hit hitting $1,500 by 2025. Wood, a long-time Tesla bull, is a major beneficiary of Tesla's success. Ark's flagship fund — Ark Innovation — has seen more than $16 billion in inflows in the past year, largely due to the ETF's near 150% rally in 2020. Tesla is the fund's biggest holding, accounting for more than 10.5% of the ETF, and has rallied more than 665% in the past 12 months. Some key assumptions behind the new bullish target: Ark Invest see's Tesla manufacturing between 5 million and 10 millions vehicles by 2025 at a lower cost. Ark now assumes Tesla has a 50% chance of delivering fully autonomous driving by 2025. The insurance business adds another $60 to the long term price target. Ark sees Tesla launching a robo-taxi service, with the possibility it has to launch as a human-driven ride-hail service first. "In ARK's Tesla price target, please note that electric vehicle and robotaxi business lines generate roughly 40% and 50% of Tesla's expected market cap," Ark Invest analyst Tasha Keeney wrote . "ARK estimates that Tesla's vehicle fleet gives it access to 30-40 million miles of data per day, up from 20 million per day last year. If successful, Tesla could scale its robotaxi service rapidly, allocating the additional cash in turn to manufacturing capacity serving its autonomous network. If 60% of its vehicles equipped with Autopilot were to serve as robotaxis, Tesla could generate an additional $160 billion in EBITDA in 2025," said Keeney. Wood, who manages five ETFs that center around disruptive innovation, continues to buy shares of Tesla during a dip in the stock. Tesla is down 7% this year, largely due to fear of rising interest rates, and Wood has scooped up shares during down days . While Wood said her confidence in Tesla is growing , many analysts believe Tesla does not warrant its lofty valuation. Of the 34 analysts on Wall Street that cover Tesla's stock, only 10 have a buy rating on Tesla, according to FactSet. Fifteen have a hold rating and 9 have a sell rating. Plus, the average price target of the 34 analysts is $652.40 per share, which implies about 0.4% downside over the next 12-months. Piper Sandler is the biggest bull on Tesla of the major Wall Street firms with a $1,200 12-month price target. Shares of Ark Innovation are down 1.7% in 2021.

Tesla: Hell of a Ride

Cathie Wood's Ark Invest just made a long-awaited, striking call on Tesla that projects shares of the Elon Musk-led electric carmaker more than quadrupling by 2025.

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