ARK values Tesla in 2026 at US$4,600 a share
Cathie Wood, the chief investment officer, founder and head of ARK Invest, the specialist new-economy house, is often spoken of as the Warren Buffett of innovation, fintech, new tech and clean energy – despite a 60%-plus slump in the price of the firm’s flagship ARK Innovation ETF (NYSE Arca: ARKK) from its 2021 peak.
But ARK Invest has undeniable clout among tech aficionados, and that’s why its call on Tesla (NASDAQ: TSLA) this week has jaws dropping all over the place.
ARK has put an expected stock value on Tesla in 2026 of US$4,600 a share.
Even the firm’s “bear case” – to which it ascribes a 25% probability – is that Tesla could be worth $2,900 a share or less in 2026. The “bull case” – also assigned 25% probability – is that Tesla could be worth $5,800 a share or more in 2026.
Given that Tesla is trading at $1,0218.00 – and that the analysts’ consensus price target on TSLA, as collated by Wallmine, is $359.00 – it is a massive call.
ARK has been bullish on Tesla for quite a while: it previously estimated that the stock would surpass $3,000 by 2025 – although its bullishness is belied by the fact that the firm offloaded more than $200 million worth of Tesla shares last month, to fund purchases in beaten-down stocks like Coinbase, Zoom and Roblox.
According to Forbes, ARK Invest bought about 60,000 shares in mid-February, after Tesla had plummeted nearly 30% for the year. Tesla still makes up nearly 9% of Ark’s flagship fund, representing a $1.2 billion stake, but that’s down from a $2.3 billion stake, representing 11% of the fund, in October.
Of course, in the stock market, any price at any time is a balance between the buyers and the sellers; it’s always a difference of opinion. Tesla is a difference of opinion on steroids: the most bearish analyst price target on Tesla in the market at present is $150.00.
Someone will end up with an egg on their face; in fact, the whole poultry farm.
ARK has made the “four-bagger from here” call based on its conviction that Tesla can deliver a network of self-driving “robo-taxis” by the end of 2026. “We now expect more demand for autonomous ride-hail at higher price points than we had modeled (sic) originally,” ARK said.
Tesla plans a vertically integrated ride-hail service with highly utilized electric vehicles, which, of course, would be Tesla-made.
While the technical feasibility of the robo-taxi plan is still uncertain, ARK analyst Tasha Keeney has updated her live, open-source Tesla valuation model, which incorporates distributions for 38 independent inputs to simulate a range of potential outcomes for the company, to show how the firm arrives at its $4,600 a share estimate.
If ARK is even half-right, the raging debates at the moment about whether Tesla is a carmaker that also sells emission credits, or an Applesque hardware/software play, look academic. Investors focusing on the quarter-by-quarter car delivery numbers, problems in China, the chip shortages and the general stymieing of Tesla’s supply chain, and how much of the reported revenue comes from green credits, are virtually academic. It has always baffled investors who look at Tesla as a carmaker that Toyota sells ten times the number of cars in a year than Tesla does – 9 million compared to 940,000, in 2021 – but that Tesla is valued at almost four times as much as Toyota. ARK might just have hit on why.