Cathie Wood, founder of Ark Investment Management LLC, forecasts that Tesla Inc.’s venture into autonomous taxi platforms could propel its stock price upward by as much as tenfold. Wood views the autonomous taxi ecosystem as a lucrative global revenue opportunity, estimating it at $8 trillion to $10 trillion, with platform providers like Tesla poised to capture a substantial share. This marks a significant shift in investor sentiment, moving beyond Tesla’s traditional valuation as an electric vehicle manufacturer to embrace its potential in autonomous driving.
In a recent interview on Bloomberg Television’s Tiger Money podcast with David Ingles and Rebecca Sin, Wood emphasized the transformative impact of autonomous taxi networks, describing them as the largest AI project currently unfolding. Ark Investment Management’s bullish outlook on Tesla hinges largely on this autonomous driving potential. Wood asserted that if their projections hold true, Tesla’s stock has substantial room for growth.
Despite Tesla’s share price decline of nearly 43% earlier this year amidst global slowdowns in electric vehicle sales, a recent rebound has mitigated most losses, though it still trails its technology sector peers. Wood, known for her bold predictions, has maintained Tesla as a top holding in Ark’s Innovation ETF despite the fund’s year-to-date challenges.
Wood outlined a “winner-takes-most” scenario for autonomous taxi networks, where providers capable of ensuring safe and efficient passenger transport stand to dominate market share. She projected revenue shares of 30% to 50% for network providers, highlighting the potential for recurring revenue and robust profit margins exceeding 50%. This model contrasts sharply with traditional vehicle manufacturing, focusing instead on ongoing service provision.
Ark’s valuation of Tesla within its $6.5 billion Innovation ETF Fund has seen Tesla’s weighting exceed 15%, prompting Wood to note the fund’s typical reluctance to increase holdings beyond 10%. While Ark has realized some profits from Tesla, it remains optimistic about the company’s forthcoming disclosures on its robotaxi initiative.
Tesla recently postponed its robotaxi unveiling to October, citing additional prototype development time. Despite this delay causing an 8.4% drop in Tesla’s stock price, Wood remains undeterred, anticipating significant advancements in Tesla’s autonomous capabilities by October.
Wood acknowledged regulatory hurdles and technological challenges in achieving fully autonomous driving but expressed confidence in Tesla’s ability to navigate these obstacles. She highlighted Tesla’s progress in securing regulatory approvals, including a recent agreement in China, and its strategic partnerships for AI-driven advancements.
Looking ahead, Wood cautioned against overstated valuations in AI-centric sectors like Nvidia Corp., citing market concentration risks akin to historical precedents. She underscored the broader trend towards disruptive technologies and predicted a shift in investor focus as interest rates adjust.
In conclusion, Wood reiterated Ark Investment Management’s steadfast strategy amid evolving market dynamics, anticipating a favorable environment for innovative stocks as economic conditions evolve.
