Longtime Tesla Inc (NASDAQ:TSLA) bull Cathie Wood has laid out her investment thesis setting a $2,000 base case scenario for Tesla’s share price in 2027 as her flagship Ark Innovation ETF bought 219,810 shares of the EV maker worth roughly $41.7 million.
Wood’s purchase was a classic example of Warren Buffet’s famous investing lesson: “Be fearful when others are greedy and greedy when others are fearful.” Ark disclosed that it went shopping last Thursday exactly when Tesla stock tanked 9.8% and the EV maker lost $51 billion in market value as investors fretted about Tesla’s shrinking profit margins.
Wood’s Ark ETF instead boldly set a $2,000 base case scenario for Tesla’s share price in 2027, an 11-fold increase. Even the bearish forecast is set around $1,400 share price, while the bullish forecast is pegged at $2,500.
Are these numbers pulled out of a hat?
Wood said she believes Tesla boss Elon Musk still has the vision to make his EV maker one of the largest companies in the world by creating a fleet of self-driving cars or robotaxis.
Ark forecasts that Tesla’s driverless ride hailing segment can bring in projected $200 billion in 2027 revenue from the unit in a bearish scenario and $613 billion in a bullish case.
According to Forbes, at $2,000 per share, Tesla would have a market capitalization of $6.3 trillion, roughly the market cap of the world’s three most valuable companies — Apple, Microsoft and Saudi Aramco — combined.
Musk seems to agree with Ark’s blueprint for Tesla’s growth. In an October earnings call, Musk said he sees a “potential path” for Tesla’s market cap to exceed Apple and Saudi Aramco’s combined valuation.
Ark owns about $850 million worth of Tesla, by far its largest position.
Thanks to the Wood’s early investment in Tesla, Ark’s flagship fund rocketed some 800% between its 2014 launch and its 2021 peak. In the process Wood became an investment star and amassed a personal fortune that grew over $400 million.
But Wood’s fund has far underperformed the broader market over the last two years as it is heavily skewed towards technology, which has been beaten down over the last two years. ARK’s tech bets have tumbled over 75% since early 2021.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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