Key takeaways
- ARK Invest forecasts Tesla shares could reach $4,400 by 2031
- ARK expects Tesla's autonomous driving and Optimus robotics businesses to fuel growth
- Shares gained approximately 5.1% between Oct. 19 and 21 before falling around 3.2% in after-hours trading
Cathie Wood's ARK Invest issued a massive new price prediction for Tesla, and forecasted that the electric vehicle maker's shares could climb above $4,000 by 2031. In an Oct. 19 report, ARK outlined a base-case valuation of $4,400 per share, alongside a bullish target of $5,000 and a bearish scenario of $3,300.
(Source: ark-invest.com)
Compared with Tesla's Oct. 20 closing price of $373.71, the base-case forecast represents a potential gain of about 1,077%.
Wood has had a long-standing confidence in Tesla CEO Elon Musk's ambitions to transform the automaker into an artificial intelligence, autonomous transportation and robotics powerhouse.
Cathie Wood Bets Big on Tesla Robotaxis and Optimus
ARK's ambitious forecast depends heavily on Tesla's robotaxi business, which the investment firm expects to account for approximately 80% of the company's enterprise value by 2031. Its projections assume Tesla could operate 8.1 million robotaxis, and generate approximately $753 billion in annual ride-hailing revenue.
Meanwhile, ARK expects Tesla's Optimus humanoid robot business to become another big revenue driver, potentially contributing $212 billion annually by 2031.
The investment firm's model also projects that Tesla could reach a market capitalization of approximately $17.5 trillion, assuming its autonomous driving, robotics and energy businesses expand as anticipated. However, these predictions depend on aggressive commercialization assumptions, including regulatory approvals, technological progress and widespread adoption.
Tesla Stock Climbs Before Earnings but Slips After Results
Tesla shares initially climbed after ARK's bullish forecast from $368.06 on Oct. 19 to $373.71 on Oct. 20. The stock extended those gains on Oct. 21, and closed at $386.47, which represented a 3.41% increase for the session.
However, the rally encountered fresh uncertainty after Tesla released its third-quarter earnings.
The company reported approximately $28 billion in revenue, while net income declined 44% year over year to $787 million. Adjusted earnings reached $0.48 per share, narrowly beating analyst expectations.
(Source: assets-ir.tesla.com)
Despite the earnings beat, Tesla shares declined approximately 3.2% in after-hours trading as investors weighed weaker profitability against the company's massive artificial intelligence investments.
While ARK sees enormous opportunities in autonomous transportation and robotics, Tesla must still prove that these businesses can generate the revenue and profits needed to justify such an extraordinary valuation.
