Late on Thursday, after Tesla’s (NASDAQ: TSLA) Q1 earnings left investors worried about the EV major’s margins, Cathie Wood’s ARK Invest issued a report on Tesla with the stock expected to reach $2,000 by 2027.
In a bull case scenario, ARK expects TSLA stock to be valued at $2,500 while in a bear case scenario, the stock is projected to be valued at $1,400. The $2,000 price target means that TSLA could reach a market capitalization of around $6.34 trillion, compared with the current market cap of around $510 billion.
ARK anticipates that the company’s “prospective robotaxi business line is a key driver, contributing 58% of expected enterprise value and 45% of expected EBITDA in 2027.” Cathie Wood elaborated more on this on CNBC and commented, “We want Tesla to scale its units because each one of them now represents the potential for a robotaxi, or a robotaxi fleet. The robotaxi service is going to be, from a margin point of view, more like a SAAS business and so we think that it is very smart to maximize unit because they have so much option value now.”
ARK Invest bought into the TSLA dip on Thursday, buying 219,810 shares to bring it to 9.3% of the ARK Innovation ETF (ARKK) portfolio. ARK also added 36,213 shares to the ARK Next Generation Internet fund (ARKW), and TSLA now comprises 6.23% of the portfolio.
ARKK has gained more than 20% year-to-date.