Don't Miss This: ARK Predicts Tesla's Stock Skyrocketing to $2,600 by 2029

Tesla has always been a titan in the electric vehicle realm, but ARK Investment Management's latest projections push the boundaries of what's possible. The investment firm updated its open-source model for Tesla, forecasting an eye-popping expected value of $2,600 per share by 2029.

Unpacking ARK's Projections

ARK's forecast isn't just a shot in the dark. It includes both bull and bear scenarios, with Tesla's share prices potentially soaring to an astounding $3,100 in a bull market and descending to $2,000 in a bear market. These figures are grounded in Monte Carlo simulations, utilizing 45 independent inputs that offer myriad outcomes for Tesla’s stock and overall performance.

The Robotaxi Revolution

A fascinating takeaway from ARK's model is the critical role of Tesla's robotaxi business. ARK anticipates that nearly 90% of Tesla's enterprise value and earnings by 2029 will be fueled by this sector. In stark contrast, electric vehicles are expected to account for about 25% of total sales and just 10% of earnings, with the robotaxi business boasting considerably higher profit margins.

Bear and Bull Scenarios

In ARK's bear scenario, Tesla is predicted to sell 5.8 million vehicles, generating $250 billion in electric vehicle revenue and a jaw-dropping $603 billion from autonomous ride-hailing services. Under this scenario, Tesla’s gross margin is expected to be 56%, coupled with an EBITDA margin of 32%, resulting in a market cap of $7,000 billion and a $2,000 share price.

Conversely, the bull scenario paints a much rosier picture: Tesla is projected to sell 14.4 million vehicles, amassing $394 billion in electric vehicle revenue and a staggering $951 billion from its autonomous services. The total gross margin is forecasted at 53%, and the EBITDA margin remains at 32%. This optimistic outlook foresees a market cap of $10,900 billion and a share price skyrocketing to $3,100.

Tesla's Autonomous Edge

A glance at the Autonomous Miles Run Rate chart is enough to reveal Tesla's massive lead in the robotaxi race. Tesla's fleet, which continuously collects data through Autopilot and Full Self-Driving (FSD), maintains a substantial advantage over its competitors. This edge raises the question: can other companies catch up?

Updates to ARK's Model

ARK's model incorporates several key updates, such as the expectation that Tesla will launch a robotaxi service within the next two years. This development is likely to serve as a significant revenue driver. The model assumes Tesla will initially own and operate its vehicle network, retaining most of the revenue per mile. Furthermore, Tesla’s vehicle production is expected to grow by 45% annually through 2029, increasing from 1.8 million units per year to a range between 6 and 16 million units.

Other Revenue Streams

While opportunities in areas like Tesla's stationary energy storage and its humanoid robot, Optimus, are part of the model, they are not pivotal to the 2029 price estimate. Similarly, the impending commercialization of the Tesla Semi in 2026 is not expected to significantly impact Tesla's value within the short term. Although Tesla's Supercharging Network is crucial for the electric vehicle ecosystem, it is not projected to be a significant revenue generator. Additionally, FSD licensing agreements with other automakers, although potentially lucrative, are not expected to substantially affect Tesla’s revenue in the next five years. ARK also notes that plans for distributed AI inference-as-a-service are more of a long-term consideration, likely beyond the five-year investment horizon.

Risks and Assumptions

It's worth noting that ARK's forecast relies on various assumptions and is subject to risks including unpredictable events such as leadership changes or natural disasters, which could remarkably alter the outcomes.

Back in April 2023, ARK Invest had predicted Tesla's share price to reach up to $2,000 by 2027, with estimates of $2,500 and $1,400 in bull and bear cases, respectively. However, these figures have been revised upward following advancements such as Tesla's FSD (Supervised) v12 moving to a new AI video training model.

Given ARK's track record and methodical approach to forecasting, their detailed simulation model is available on GitHub for further exploration and testing. Investors and enthusiasts can dive deep into the data to form their own assessments. The future looks electrifying for Tesla and its stakeholders.