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ARK’s Price Target for Tesla in 2025
- Black101 6y agoARK Invest's ARKK ETF is getting beat up pretty bad, so they had to do something to try to keep their customers (Tesla is about 10.5% of ARKK [0]). 0. https://ark-funds.com/wp-content/fundsiteliterature/holdings/ARK_INNOVATION_ETF_ARKK_HOLDINGS.pdf https://ark-funds.com/wp-content/fundsiteliterature/holdings...
- mxschumacher 6y agomany of their holdings are small and don't have a lot of trading volume, ARK owns a big share of many of these firms. For an ETF (forced selling and buying based on fund flows) the combination of extremely high valuations and low liquidity can become very, very painful.
- Black101 6y agoyeah, they won't be able to sell when they need to... they act like a small-time investor.
- riffraff 6y agonah, they act like many active managers: things seem great as long as things go up and people keep entering the theatre, and then suddenly there's a downturn and there's a tiny door to get out, and the fund is screwed. See for example Neil Woodford[0] [0] https://en.wikipedia.org/wiki/Neil_Woodford https://en.wikipedia.org/wiki/Neil_Woodford
- Black101 6y agothey say that they have 40 years of experience... surely they should have went through at least 1 major crash... unless they add up the all the 1-year intern years. I wasn't investing in stocks but I'm 40 years old and I remember 2008. The house I bought back then tripled in value when I sold it.
- mxschumacher 6y agoI always wonder whether they're super bullish on Tesla or just expect high inflation
- bob33212 6y agoBoth are likely
- tekkk 6y agoThat's so dumb. You are taking a very complex phenomenon with billions of variables and simulating it with 34 variable MCMC model to justify what seems like overestimation either way. Where's the risks chapter? How have they factored in the black swan events, such as stock market crash? Or just general bubble bursting regarding such highly valued stock as Tesla?
- DSingularity 6y agoBillions of variables? Are you serious?
- tekkk 6y agoYes. Such is the real world.
- abc_lisper 6y agoTo be fair, idk any money mangers who do billions of variables
- adflux 6y agoThis is not an analysis, this is grabbing a bunch of numbers out of the air without supporting arguments... "Autonomous Ride-Hail Revenue (net, billions)" $327 billion in 2025? FSD won't be out by then, I am certain. The edge cases are still too poorly worked out. For instance, will it slow down seeing a child run after a ball on the pavement? Or can it see "through" cars/buses? KNOWING where bicyclists are instead of only SEEING them is vital in the Netherlands, where we share our road with them. And lets just DOUBLE our profit margin on electric vehicles LOL. When the competition is getting increasingly fierce, GM, Volkswagen and other tech companies with very deep pockets (Apple, Microsoft, Google) working on self-driving technology and electric cars... ARK seems to think that Tesla operates in a void, without any competition. And that they can set the price point in 5 years.
- yaacovtp 6y agoyup, watch all the big guys go full on amazon and price their EVs low enough to wipe out tesla. Just sat in a Mach-E and ready to buy one but can't decide because there are so many other options coming to market now.
- melomal 6y agoThere's a whole heap of EVs coming from the established brands and honestly, I would choose them over any Tesla. If the VW camper van becomes reality, oh my oh my. Mach-E looks incredible! Even the Skoda EV looks amazing - it's a SKODA?!
- bob33212 6y agoI have been hearing similar arguments for a long time. It used to be "tesla has one tiny factory, just wait until Toyota converts it's many huge factories to electric". It would be great if the mach-e sold 500k units in 2022, but I would not bet on it.
- matwood 6y agoImportant to realize it's not binary. TSLA can be a great company, remain viable for a long time, and also not have a $3T market cap in 4 years. TSLA isn't living in a vacuum, and competitors are catching up. Unfortunately/fortunately for a lot of innovators, the first one to market is not always able to corner the entire market forever. Additionally, their current market cap is a gift and a curse. It's great they were able to raise more money using their value, but it also draws huge attention from current and possible competitors who let TSLA figure the EV market out. Now competitors can use their respective skillsets to compete where TSLA is weak. This is all to say that competition heating up and will dampen TSLA's potential valuation. It doesn't mean TSLA is going out of business anytime soon.
- threeseed 6y ago> Autonomous Ride-Hail Revenue (net, billions) of $327 billion by 2025. > Electric Vehicle Revenue 13x in 5 years Okay.
- yaacovtp 6y agoFunny, when I change the numbers to my assumptions I get a 2025 suggested share price of $61.00
- totalZero 6y agoThat's around where the stock was trading (split-adjusted) when Musk sent his "funding secured" tweet in 2018.
- icu 6y agoRegardless of how how sound the case for Tesla is, this is a classic money manager tactic called "talking up your book", just a more modern form of it since they put it on Github. A core part of a money managers' job is marketing. Just recognize this is what they are doing and it's no different than a money manager going on Bloomberg for a hot take or an interview.
- totalZero 6y agoAgreed. Cathie Wood's career depends upon this to be true. In my humble opinion, an investment thesis that requires github in order to be communicated effectively is not a strong one. We're not talking about a backtest of a multifactor model here. It's one stock, one direction, one trade.
- lpapez 6y agoI know it is quite common practice, but I find using Monte Carlo methods to predict stock prices to be quite ironic and funny.
- totalZero 6y agoIs it common? The problem with so many nondeterministic models is that they bake their assumptions into the results, but gap moves in stock valuation are almost always the result of mistaken assumptions.
- Xylakant 6y agoI think that your parent is referring to the Casino de Monte-Carlo or the Vegas resort, both gambling places not unlike the stock market investments for some folks. https://en.m.wikipedia.org/wiki/Monte_Carlo_Casino https://en.m.wikipedia.org/wiki/Monte_Carlo_Casino
- getlawgdon 6y agoNo competent system developer uses mc to "predict stock prices." None. Monte Carlo is a process for estimating variation in randomized simulations of a system's parameters. It is just one statistical tool for examining simulated trade distributions. On unsampled data it is useful for assessing distributions of performance characteristics. I don't know of one person using mc to try to predict prices however.
- melomal 6y agoWell with the current rate of Unicorns going public and raising obscene amounts of money and valuations being somewhat in the WTF levels these predictions sound about right......
- totalZero 6y agoWhat happens to that phenomenon when rates rise and the cost of money increases?
- chii 6y agoThere's certain monied interests that would want to keep the cost of money low enough that they can ride it up before selling, and i'm sure their influence is high. Even the Feds are saying they'll let inflation run high "for a bit".
- snicksnak 6y agoAssuming this will happen, would this make Musk the first trillionaire?
- joneholland 6y ago> In preparation for its robotaxi service, Tesla could launch a human-driven ride-hail network first, delivering a highly profitable recurring revenue stream and limiting the downside of a failed autonomous service. How do I short Cathy Woods? Uber and Lyft still haven’t figured out how to turn a profit and they think not only could Tesla enter this space, they would be able to do it and be immediately profitable. LOL.
- throwaway4good 6y agoI think ARKK is shortable on most brokers. Knock yourself out.
- quotha 6y agoIt’s Cathie Wood. I would not call it “shorting her”, but you can buy puts on the ARK ETFs. There is a rather large market for it that would gladly sell them to you.
- DSingularity 6y agoHow much of Uber and Lyft revenues go to drivers?
- SirSavary 6y agoIt’s not about being right, it’s about exiting and leaving someone else holding the bag
- deleted 6y ago[deleted]
- Gatsky 6y agoGross margins and free cash flow yields seem very high here. I don’t see that Tesla has the kind of pricing power to make this a reality. EV competition will surely prevent this from happening? I heard ARK’s founder talking about genomics the other day, they have a fund that invests in this area. I work in genomics and most of what she said was just buzzword nonsense.
- bflesch 6y agoThe "Total EBITDA Margin*" is currently 14%, they expect it to be 31% in the "bear case" and less than that, 30%, in the "bull case". The bear case should be something like 10% margins or even less.
- jpgvm 6y agoEh. I think 10% margins would require some monumental fuckups on Telsa's part that I don't think are on the cards. M3/MY are some of the most capital efficient vehicles to build as a result of pushing hard to make use of mega castings, vertically integrated electronics and seat production etc. (i.e little to no outsourcing, no vendor margins to pad into price). Munroe estimated a 30%+ margin on the M3 and he was pretty anti-Tesla up until that point and had some pretty damn harsh criticisms of the MS. I'm not long Tesla at these prices (if it was to drop to $400 I would be in again) but I wouldn't be betting on the stock price going to $60.
- NiceWayToDoIT 6y agoLet's just make up few number from thin air and lets create 2008 gold rush. Current Tesla P/E is 1,027.86, and current "value" is 628.58B. Valuation that says it worth more than 6 top automakers combined. https://www.thedrive.com/news/38485/at-631b-tesla-is-now-worth-more-than-the-next-top-6-car-companies-combined https://www.thedrive.com/news/38485/at-631b-tesla-is-now-wor... Just to put everything in perspective Toyota makes 11 million cars per year. Tesla makes 0.5 million. Ok we can say there is future value, batteries and blah blah blah... But actually it "worth" more than top lithium battery makers LG Cham (51,8B) and Panasonic (32B). So, lets cut the bull** lets just say Tesla will worth $30 Trillion and then quickly sell all stocks, and then buy all automakers and battery producers in the world + and a few techno companies like Microsoft, Apple and Google just for the sake of autopilot development?!
- hahahahe 6y agoAs with all high flying stocks pay close attention to R&D and stock comps. If Tesla is at the forefront of auto technology why is their R&D all but stalled? It’s laughable.
- vgchh 6y agoIrrespective of how it will play out, I appreciate the analysis from Ark. But I wish they also accounted for "China factor". Given that China is one of the largest growth markets for Tesla and the US-China geo-political landscape is changing to be adversarial, what if China kicks out Tesla entirely? How would that impact this model?
- throwaway4good 6y agoIt will f it up completely. China will the largest market for EVs for years to come. Right now China loves Tesla but one day things may change. This is an article from today hinting how it may happen. https://www.scmp.com/news/china/diplomacy/article/3126273/elon-musk-denies-tesla-cars-are-being-used-spying-china https://www.scmp.com/news/china/diplomacy/article/3126273/el... Elon Musk denies Tesla cars are being used for spying in China
- known 6y agoARK used a Monte Carlo model with 34 inputs; What is the impact of 'unknown' variables in 2025 e.g. covid
- yyy888sss 6y agoAll current analysis misses the point. Tesla is not just a traditional auto company. Musk is involved with Space-X, which is likely going to be the company that takes humanity interstellar. Additionally, right now there is a Tesla Roadster floating through space which will likely be picked up by aliens in future. This means Musk will probably become a Steve Jobs like deity figure among advanced alien species, allowing Tesla to export a luxury product at high margins throughout the Milky Way. Conservatively assuming only 1 in billion stars with an advanced civilisation, thats still a market of thousands of billions of high income aliens. Stop thinking about traditional metrics such as 'global market share' and then current valuations frankly look too way low.
- abc_lisper 6y agoThis is the way!
- throwaway4good 6y agoI was enjoying reading about the ORA Good Cat. An EV by the Great Wall Motors. Designed by a Porsche designer, desirable, retails for about 1/3 of a Tesla. In China. With a decade, the AI powering autonomous vehicles is going be commiditized in same way as speech recognition or OCR has become commiditized. And the dominant electric automobile makers will be Chinese. I have no idea where valuation for Tesla will peak. But in ten years. I am pretty sure Tesla will be valued similarly to any other established car brand (that is P/S P/E will be similar to that of Volkswagen, Ford etc.).
- dalbasal 6y agoYes, this is incredibly optimistic. That said.... what were you expecting? This is Ark. Cathie Wood.. TSLA. Yeah, Yeah, PEs are through the roof and skies are falling. I agree. But, when you click to read Ark's TSLA forecasts, you click for outrageous investment theory. I got what I came for. Side note... If Ark is really this optimistic about Tesla's business performance... they're very pessimistic about Tesla's "multiples," or the stock market's. In the bull case for 2025, Tesla EV revenue will grow by 15X. And, high margin "Autonomous Ride-Hail Revenue" will is eclipsing EV production revenue.... presumably growing faster too. Tesla's share price grows by only 8X?! How is that possible? Did I misunderstand something?
- cloudking 6y agoSince almost all the comments are bearish, the bullish price target is probably accurate. Remember their last price target was also ridiculed, and it hit exactly. The entire NASDAQ is in a correction, so citing the current price decline isn't really fair. Tesla has a 10 year head start on the competition in the EV space, optimizing their battery production at scale and heading towards their target of a $25k car. They are also an energy company, scaling up solar and battery storage for homes. Think bigger.
- plantain 6y agoSimulations are believed by no one except those who conducted them. Experimental results are believed by everyone except those who conducted them. Anonymous