Anyone who bought Tesla (TSLA) stock before 2020 has seen the share price soar.
When Tesla became a public company in 2010, its shares traded for under $4. At the end of 2020, shares sold for less than $90. Then, the company’s stock price grew extraordinarily fast.
By the end of 2021, each share cost around $800. Prices peaked in November 2021 at about $1,222. While most companies were struggling to pivot during the COVID-19 pandemic, Tesla thrived.
Since then, Tesla has experienced one significant dip that brought its price to around $810. It quickly rebounded above $1,000.
The recent volatility probably doesn’t matter a whole lot to early buyers, who can simply feel happy that they’ve made a small fortune from a stock cost them under $90 per share. Investors who didn’t feel so confident about the future of electric vehicles in general or Tesla specifically have to think more carefully about how they approach this opportunity.
Is now a good time to buy Tesla shares? How high – or low – could the price go?
Cathie Wood and ARK Invest have some insights into Tesla price target. From their perspective, Tesla still remains attractive. Let’s take a closer look at their approach to see whether it’s really possible to profit from Tesla shares at today’s price.
Ark’s Expected Value for Tesla
ARK Invest has set three price targets for Tesla to reach by 2026. According to the company’s model:
- Tesla will most likely reach $4,600 per share.
- The bear position indicates a value of $2,900 per share.
- The bull position shows that Tesla could reach $5,800 per share.
What do these numbers mean?
ARK Invest uses a predictive model called Monte Carlo. The Monte Carlo analysis generates a range of possible outcomes.
The expected value ($4,600 for Tesla) is the most likely scenario. The bear position ($2,900) has a 25% possibility. The bull position ($5,800) also has a 25% probability but is on the optimistic side of the spectrum.
What Factors Influence Cathie Wood’s Tesla Price
Cathie Wood and ARK Invest expect Tesla to generate revenue from:
- Electric vehicle sales
- Robotaxi services
- Human-driven ride-hailing services
The model assumes that electric vehicle sales will make up about 57% of a projected $843 billion revenue. It projects 34% of revenue from robotaxi services, 5% from ride-hail services, and 3% from insurance.
It’s important to note that Tesla has not perfected its autonomous driving technology. Tesla robotaxis currently operate in Las Vegas, but they only run inside the Las Vegas Center Loop built by the Boring Company, another company owned by Elon Musk.
The current environment remains static and doesn’t include unpredictable behaviors from other drivers. While robotaxis can work well in this type of situation, it’s uncertain when they will have technology that makes them reliable on public roads. Additionally, Tesla might need to seek federal, state, or municipal approval to operate robotaxis on some roads.
ARK’s projections, therefore, assume that Tesla will improve its technology and get approval from governments before 2026, which is a bit risky. For what it’s worth, Elon Musk says that Tesla will launch autonomous driving well before 2026.
He could mean the operations that have already launched in Las Vegas. If that’s the case, ARK might want to reconsider how it defines autonomous driving. Then again, they could have insights into the technology that other investors lack.
ARK Invest Adjust Expectations by Production
The ARK Invest website provides a graph that shows how it expects Tesla shares to grow depending on when the company delivers ride-share and autotaxi services.
About a third of the way down this page, you can adjust the probability density of scenario to see how launch times would likely affect stock prices.
Depending on when individual services get launched, ARK Invest believes share prices will reach somewhere between $2,016 and $6,905. The extreme predictions are unlikely because the odds are low that Tesla will completely fail to launch the service or double its expected value.
Tesla Price Target 2026, 2027, 2028, 2029 2030
The further you look into the future, the harder it becomes to predict price targets accurately. Still, Cathie Wood and ARK Invest have plotted the price target trajectory they believe Tesla stock will follow during that time. Their estimates show that Tesla’s price could reach:
- $7,500 by 2027
- $14,000 by 2028
- $17,500 by 2029
- $22,000 by 2030
Of course, these estimates depend on Tesla meeting its development and revenue goals.
Ark Invest Open Source Model Predicts Price Targets
ARK Invest is one of a small number of investment firms that makes its predictive model available to anyone. You can download all of the necessary files on GitHub.
The open source nature of ARK Invest’s model means that other investors can tweak the model to match their expectations. For example, you might not believe Tesla’s robotaxis will become as successful as ARK forecasts. In that case, you could adjust the expectations to see how it influences the price target.
Is Now a Good Time To Buy Tesla Shares?
Tesla stock has experienced a lot of ups and downs over the last year. The model used by Cathie Wood and ARK Invest, however, shows that shares will likely increase in value over the next several years. Even their worst-case scenario has Tesla shares doubling in price by 2026.
Still, Tesla stock can look quite risky to investors. The high price creates a barrier that some investors will not want to climb. Forecasts become even murkier when you try to forecast prices as far out as 2030.
According to Cathie Wood and ARK Invest, Tesla looks like a great buy right now. If you can buy them on a price dip, you might find that shares are more affordable and lead to even higher returns.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.