In a breaking announcement, ARK Invest has predicted that Tesla’s stock will reach an astonishing $2,000 per share by 2027, representing a twelve-fold increase from its current value of $163. This will also see Tesla’s enterprise value skyrocket to $6 trillion. While this might sound like an incredible claim, let’s take a closer look at the reasoning behind it.
✅ Tesla is expected to reach $2,000 per share by 2027, with a massive $6 trillion enterprise value.
✅ The success of Tesla’s robotaxi business is a key driver of this projection, contributing 58% of the expected enterprise value.
✅ Electric vehicles are projected to account for 62% of revenues, with energy storage contributing 3%.
✅ Tesla could generate earnings from both vehicle sales and a recurring ride-hail revenue stream, which could generate software-like margins.
✅ This projection is extremely sensitive to the launch of the robotaxi business.
To begin with, we need to remember that ARK Invest and Cathie Wood predicted a similar price increase back in 2018, calling for $4,000 per share pre-split when Tesla was trading at around $300 per share. Tesla ended up hitting this price target, indicating that ARK Invest has a history of accurate predictions.
So, what are the key drivers behind the $2,000 price target? According to ARK Invest, Tesla’s prospective robotaxi business will contribute 58% of the expected enterprise value and 45% of expected EBITDA in 2027, with a projected launch date of late 2024. Additionally, electric vehicles are expected to account for 62% of revenues in 2027, with significantly lower margins than the robotaxi revenue.
Another important factor is the forecasted capital efficiency per Tesla produced, which is expected to drop from $14,755 to below $7,000 after two new giga-factories ramp up production. Furthermore, stationary energy storage is predicted to contribute $6.6 billion or 3% to Tesla’s expected enterprise value in 2027, with margins of around 20-25%.
As Tesla will use batteries for the most profitable use case, the robotaxi platform is expected to provide the highest investment return on batteries for the company. With the robotaxi platform, Tesla should be able to generate earnings from both vehicle sales and a recurring ride-hail revenue stream, which ARK Invest believes could generate software-like margins. Accelerated approval driven by Tesla’s data library should also help prove statistically the safety of its vehicles, giving it a significant advantage over its peers.
ARK Invest’s bear and bull cases suggest that TSLA could be valued between approximately $1,400 and $2,500 per share in 2027. However, it’s worth noting that this price target is highly sensitive to the launch of the robotaxi business, which could significantly impact Tesla’s bottom line. While the launch date of the robotaxi business is still unknown, it’s expected to be later than 2024.
In conclusion, while the $2,000 per share price target might seem outlandish, there are valid reasons behind ARK Invest’s prediction. If Tesla’s robotaxi business does take off as expected, the potential returns could be huge. Only time will tell whether this prediction will come to fruition, but it’s certainly an exciting prospect for Tesla and its investors.
Frequently Asked Questions
The projection is based on several factors, including the potential success of Tesla’s robotaxi business, which ARK believes will contribute 58% of the expected enterprise value.
Tesla’s expected enterprise value is $6 trillion.
The projected launch of Tesla’s robotaxi business is late 2024.
Electric vehicles are projected to account for 62% of revenues.
Energy storage is projected to contribute 3% to Tesla’s expected enterprise value in 2027.