Cathie Wood remains as bullish as ever on Tesla (NASDAQ:TSLA) stock. The founder of Ark Invest has been a fan of the electric vehicle (EV) leader for a while, seizing recent declines as an opportunity to acquire more shares. Now, she’s issuing a Tesla prediction that seems bold — even for her.
Wood believes that TSLA stock could reach $2,000 per share by 2027 if the company continues its advances in robotaxi technology. Her bear case sees Tesla reaching $1,400 per share, which still represents a significant increase from TSLA’s current share price of around $165. If the valuation outlined in her bull case proves accurate, though, it would see Tesla’s market capitalization reaching $5 trillion, similar to a recent prediction made by ChatGPT.
How likely is Tesla to reach this high price point? Let’s dive into Wood’s forecast.
TSLA Stock: How High Can It Go?
Wood’s prediction comes at a time when TSLA stock is struggling. The company reported first-quarter earnings earlier this week, falling just short of Wall Street expectations. Today, the stock is rising for the first time since then, although its gains are minimal. This performance is primarily due to a shift in market momentum.
While Wood’s forecast likely isn’t doing much for the stock today, it is worth a closer look. Per CNBC:
“Wood believes the robotaxi opportunity could deliver $8 trillion to $10 trillion in revenue by 2030. Tesla began to discuss its ambitions in self-driving technology in 2016 […] Tesla is the biggest holding in her flagship Ark Innovation ETF.”
It’s true that Tesla is focused on autonomous technology and has its eye on the robotaxi market, a field expected to boom within the coming years. Market outlook data indicates that the robotaxi market is expected to hit $38.61 billion by 2030, expanding at a compound annual growth rate (CAGR) of 67.8%.
This is a great opportunity for the companies making advancements in the space. However, as Bloomberg reported in February, Tesla has not delivered on its robotaxi promises so far. The company’s autonomous technology in general hasn’t advanced quickly, despite Musk’s brazen claims. Instead, it has resulted in plenty of a crashes, suggesting that it still needs significant improvements.
CNBC also notes that Wood isn’t deterred by Tesla’s recent earnings report. Still, while the company should bounce back, there’s little reason to suspect it will because of robotaxi progress. Additionally, investors shouldn’t ignore the fact that CEO Elon Musk’s vehicle price cuts haven’t worked to spur growth so far.
With all that in mind, Cathie Wood’s price target seems pretty ambitious. Her bull case implies an increase of over 1,000%. While Tesla has years to reach that mark, it will need to demonstrate significant progress before a valuation like that makes sense.
The Road Ahead
Contrarian stock picks are Wood’s signature and her track record speaks for itself. However, it still seems unlikely that TSLA stock can reach such a high price point unless something drastic changes.
Meanwhile, other companies are working hard to beat Tesla to the front of the robotaxi race. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) subsidiary Waymo has already reported advancements in its robotaxi fleet this year, as has Chinese tech giant Baidu (NASDAQ:BIDU). Experts indicate that both may have an edge over Tesla due to their use of lidar technology.
This isn’t to say that TSLA stock can’t come close to Wood’s target. But it will likely be a difficult road ahead as robotaxi competition increases.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
