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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\u2019s a cliche, known as Gates\u2019 law, that Cathie Wood and ARK Invest need to be true if their lofty price target for Tesla<\/a> is to become reality.<\/p>\n ARK analysts, led by Tasha Keeney, put out a report<\/a> detailing their latest bullish prediction for Elon Musk\u2019s EV giant on Wednesday. It argues Tesla shares will skyrocket roughly 1,350% to $2,600 by 2029\u2014and robotaxis are key to the optimistic thesis. \u201cARK estimates that nearly 90% of Tesla\u2019s enterprise value and earnings will be attributed to the robotaxi business in 2029,\u201d Keeney and her team wrote.<\/p>\n Of course, Tesla hasn\u2019t launched a robotaxi business just yet. But ARK says it\u2019s all but guaranteed to roll out soon. \u201cWe believe that Tesla will launch a robotaxi service within the next two years, and that the probability Tesla fails to launch a robotaxi service within five years is di minimis<\/a>,\u201d Keeney and her team explained, noting that Tesla has said it will unveil its robotaxi app and prototype at an August 8 event<\/a>.<\/p>\n But what if Tesla doesn\u2019t expand its robotaxi network in time, due to difficulties gaining regulatory approval or for any number of other reasons? Well, then ARK\u2019s analysts are far less bullish. They say Tesla could launch a \u201chuman-driven\u201d ride-sharing business to compete with the likes of Uber<\/a>, but that wouldn\u2019t boost share prices in the same way robotaxis could. \u201cWhile unlikely, if we were to eliminate the possibility of a robotaxi network from our model, our price target would be ~$350,\u201d Keeney and her team admitted Wednesday.<\/p>\n That means Tesla shares could surge 1,350% over the next five years\u2014or a far less staggering 95%\u2014and it all depends on the success of the robotaxi business, at least according to Cathie Wood and ARK Invest. However, the ARK Invest team doesn\u2019t include this scenario in their bear case outlook, which still foresees Tesla shares rising to $2,000 by 2029.<\/p>\n ARK\u2019s 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\u2019s vehicle production fell 1.7% from a year ago to 433,000 as EV demand slowed.<\/a> But ARK says the rollout of robotaxi business will lead to significant sales growth as robotaxi \u201cfleet owners\u201d begin to buy Tesla\u2019s new EVs. \u201cRobotaxis likely ease manufacturing scaling by simplifying vehicle designs as well as generating additional capital from highly cash flow generative rides,\u201d they added.<\/p>\n While ARK\u2019s latest forecast for Tesla shares may seem overly optimistic, Cathie 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\u2019s Tim Cook had even approached him about buying the company.<\/p>\n But Tesla ultimately made it through that dark time, and Wood\u2019s seemingly wild prediction came true, with Tesla shares hitting the split-adjusted $4,000 equivalent<\/a> in January 2021. Now, Wood is predicting another run of good form at Tesla, and she noted the outlook doesn\u2019t even include any revenue from the potential release of Tesla\u2019s Optimus personal robot<\/a>, which could be substantial.<\/p>\n \u201cOur 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 multi-trillion-dollar market,\u201d ARK\u2019s analysts argued.\n
Tesla CEO Elon Musk also responded<\/a> to ARK\u2019s forecast on X<\/a> Wednesday, calling it \u201cextremely challenging, but achievable.\u201d<\/p>\n<\/div>\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n<\/div>\n