Tesla (NASDAQ:TSLA) stock has underperformed the broader markets and is down about 29% year-to-date. However, Cathie Wood’s Ark Invest is making bold predictions about TSLA stock, suggesting it could skyrocket to $2,600 from its current price of approximately $177.29 over the next five years. This eye-popping surge, according to ARK’s analysts, hinges largely on Tesla’s expected launch of a robotaxi service. After ARK’s announcement, TSLA stock is up about 7% in the pre-market session.
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Ark Invest estimates that by 2029, nearly 90% of Tesla’s enterprise value and earnings could be derived from its robotaxi business. This segment, it argues, will likely boast significantly higher margins than Tesla’s electric vehicle (EV) sales, which are expected to make up around a quarter of total sales and approximately 10% of earnings by 2029.
ARK Confident in Tesla’s Robotaxi Launch
The optimism surrounding Tesla’s robotaxi ambitions stems from ARK’s belief that Tesla is poised to roll out this service within the next two years with minimal risk of failure. ARK believes that Tesla will initially operate its vehicle network, capturing all revenue per mile.
As the service matures, third-party operators may take over parts of the fleet, earning some of the revenue while Tesla retains the majority share.
Analyzing the Path to $2,600
For Tesla stock to reach $2,600 by 2029, it needs to climb a staggering 1,367% from its current levels. This might seem highly unlikely at first glance, but considering Tesla’s recent history, TSLA stock has already surged over 1,143% in the past five years.
However, challenges remain on the horizon. In the near term, Tesla could encounter headwinds from subdued EV demand, potential price reductions, and intensifying competition in the automotive sector. These factors could temper short-term growth prospects despite ARK’s bullish long-term outlook.
Is Tesla a Buy, Sell, or Hold?
While ARK Invest is bullish about Tesla stock, Wall Street remains sidelined. TSLA stock has nine Buys, 14 Holds, and nine Sell recommendations for a Hold consensus rating. The average price target on TSLA stock is $172.92, implying about 2.46% downside potential from current levels.
