Cathie Wood is standing by Tesla, Amid a sharp sell-off

Paresh Jadhav

11 months ago

Cathie Wood, CEO of Ark Investment Management, remains confident about Tesla despite its steep sell-off. She predicts the company will unveil their robotaxi service within two years and this additional revenue stream will lift their stock even higher.

However, Wood remains undaunted by recent earnings miss and potential 2024 delivery shortfall, and continues her support of electric car manufacturer.

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Ark Invest’s Cathie Wood Reaffirms Bullish Position on Tesla

Cathie Wood of Ark Invest has built her career around her belief that rapidly-advancing technologies offer investment opportunities for her clients. When she predicted Tesla stock would hit $4,000 within five years, she wasn’t simply making idle speculations.

While some have expressed worry over Tesla’s Cybertruck’s slow ramp up and Elon Musk’s reference to difficulties producing autopilot features for it, Wood remains committed to her optimistic perspective of Tesla.

Ark Invest publishes all its transactions daily, so it’s easy to keep tabs on its major holdings. Although Wood’s recent move to sell some Tesla shares may appear counterintuitive, this likely forms part of an overall rebalancing exercise. Furthermore, ARK Invest has had great success investing in electric vehicle stocks over time; hence this sale likely won’t prevent further consideration in the future.

She Expects the Company to Reach $2,000 Within Five Years

Longtime Tesla bull Cathie Wood remains undaunted as competition intensifies and demand declines; she heads ARK Investment Firm which holds TSLA as its flagship ETF – Ark Innovation ETF – and believes its stock will reach $2,000 within five years.

ARK Investor’s new bull case centers around robotaxis, with estimates by ARK projecting that an extensive fleet of FSD vehicles capable of producing revenues up to $1 trillion could drive revenues for Tesla by 2027 – becoming the first firm ever to reach this feat.

Wood cautions that successfully launching their fleet won’t be easy, especially with rivals such as Alphabet’s Waymo and Baidu’s FSD capabilities rapidly evolving. Yet Wood remains confident that successful robotaxi launches can propel Tesla stock to their target.

She Believes Robotaxis Will Revolutionize the EV Industry

Elon Musk has always held firm to his belief that electric vehicles would eventually replace traditional gasoline-powered cars; yet many Detroit automakers have been slow to embrace EV production.

One factor for this could be that electric vehicles require large quantities of expensive semiconductors for proper functioning – an issue for traditional automakers which largely rely on mechanical processes for profit generation.

Wood sees an opportunity for these companies to continue their expansion by investing in autonomous taxi services (known as robotaxis ) that could prove revolutionary for the industry, potentially yielding $9 trillion worldwide revenues by 2030.

Ark Invest estimates that Tesla’s robotaxi business could contribute as much as 50% of expected value by 2026, which prompted it to accelerate purchases of Tesla shares recently – accounting for roughly 10% of market value in its flagship exchange-traded fund, Ark Innovation.

She Reaffirms Her Expectations

Wood’s faith in Tesla can be seen through Ark Invest’s actions. Last January, they purchased $3.3 million worth of its shares despite market turmoil; and increased their purchases of TSLA shares multiple times before.

But her lofty expectations for Tesla’s future lack any concrete data support; her forecast rests heavily on robotaxi revenue which could account for 25% of its annual revenue and up to 58% of its enterprise value by 2027.

That seems like an expansive number, but there are multiple reasons it’s unrealistic. First of all, we don’t yet know the viability of robotaxis; secondly, other companies such as Alphabet and Baidu may beat Tesla to developing this technology; furthermore we don’t yet know the cost associated with creating and running such fleets.