Cathie Wood Believes Tesla Stock Will Reach $2,000 in Four Years

Ark Invest's bold prediction hinges on Tesla's planned robotaxi rollout.

Cathie Wood in a black checkered dress.
Tesla is a top holding of Cathie Wood’s Ark Invest. Marco Bello/Getty Images

Cathie Wood‘s investment firm ARK Invest predicts Tesla (TSLA) stock could reach $2,000 per share by 2027 despite a recent slump in the electric vehicle’s share price due to aggressive price reduction cutting into profitability.

Ark Invest’s new valuation model indicates Tesla shares, currently traded at $164, will reach anywhere between $1,400 and $2,500 by 2027, according to a report published yesterday (April 20). There is a 25 percent chance of it hitting the bull-case of $2,500 and an equal chance of reaching $1,400 in four years. An average estimate produced by the model is $2,000, which would give the Elon Musk-led company a market cap of more than $6 trillion.

Tesla’s share price has declined by 17 percent in the past month as the company keeps cutting prices of its electric vehicles in a bid to boost sales.

On April 19, Tesla reduced the prices of its popular Model 3 and Model Y for the sixth time this year. The company’s first-quarter earnings report released the same day shows previous price cuts have already put a dent in profitability. During a call with investors following the earnings release, Musk said Tesla’s profit margin dropped to 19.3 percent in the first quarter from nearly 30 percent a year ago, the lowest level in two years. He said he hopes to bring margin back to above 20 percent this year.

To that end, Tesla raised the prices of its high-end Model S sedan and Model X SUV by as much as 3 percent on April 20.

Wood’s bold prediction hinges not on Tesla’s EV business, but on its prospective robotaxi service. Ark Invest expects robotaxi revenue to make up 25 percent of Tesla’s total annual revenue and 58 percent its enterprise value in 2027. By that time, EV sales will account for 62 percent of Tesla’s revenue, according to Ark Invest’s model. That number currently stands at 90 percent, according to Tesla’s first-quarter earnings report.

Robotaxi is a planned autonomous ride-hailing service built upon Tesla’s self-driving technology, which is currently available in Tesla cars for an extra fee. Musk said on this week’s earnings call he expects to roll out robotaxi service sometime in 2024. Ark Invest predicts the service could be available as soon as this year or be delayed to 2030 in a worst-case scenario.

Tesla is Ark Invest’s top holding, making up nearly 10 percent of its Ark Innovation ETF. The fund also holds large stakes in Zoom, Roku and Coinbase.

Cathie Wood Believes Tesla Stock Will Reach $2,000 in Four Years