Tesla shares jump after ARK lifts price target By Investing.com

By Samuel Indyk

Investing.com – Tesla shares were trading 3.5% higher in early US trade on Monday after Cathie Wood’s ARK Investment Management published a report on the electric vehicle maker, estimating that the share price will hit $3,000 in 2025. If Tesla Inc (NASDAQ:TSLA) were to hit that price target, its value would surge to around $2.9tln based on the current number of outstanding shares.

In the research note released on Friday, ARK gives Tesla a 50% chance of delivering fully autonomous driving by 2025, previously they had estimate there was a 30% chance of fully autonomous Tesla vehicles by 2024. If successful ARK estimates Tesla could scale its robotaxi service rapidly.

“If 60% of its vehicles equipped with Autopilot were to serve as robotaxis, Tesla could generate an additional $160 billion in EBITDA in 2025,” ARK says.

Bull and Bear case

ARK also published its share price expectations in ‘Bull’ and ‘Bear’ case scenarios. In its ‘Bull’ case, ARK said Tesla’s share price could reach $4,000 and gives that scenario a 25% probability of occurring. In its ‘Bear’ case, also a 25% chance, ARK sees Tesla shares at $1,500.

ARK also added that they have not modelled bitcoin assumptions in their model. This comes after Tesla announced that they had recently bought $1.5bln worth of the world’s largest cryptocurrency to diversify their reserves.

ARK and Tesla

ARK shot to prominence in 2020 and early 2021 after a strong performance from their funds las year. The ARK Innovation ETF (NYSE:ARKK), the firm’s largest and most well-known fund, jumped over 150% in 2020, benefitting from its large holdings in Tesla as the electric vehicle maker’s share price jumped over 700% last year. During the pullback in recent weeks, three of Wood’s funds raised their holdings in Tesla.