By
Svetlana Soroka
April 18th, 2024
The Tesla price target projections by Ark Funds came amidst a brewing report that China is barring the use of Tesla EVs by government personnel per claims the vehicles may be used in spying and sending data back to the US.
The electric automaker, Tesla Inc (NASDAQ: TSLA) has received a new price target of $3,000 per share from Catherine Wood’s ARK Investment Management LLC. As reported by Yahoo! Finance, the renowned investment manager, through its Ark Funds estimates the firm’s stock to hit the outlined price mark by 2025.
Per the reports, the Ark Funds uses a Monte Carlo model, a system that is based on a series of simulations to determine the probability of different outcomes with random variables. The firm had a total of 34 inputs and over 40,000 possible simulations to create the new price target.
Based on the generated price data, Ark Funds has a bear case of $1,500 for Tesla shares by 2025, and a bull case for the company’s stock to top $4,000 by the same year. Tesla’s shares are currently pegged at $673.98 taking into account the 2.92% growth in the pre-market.
Tesla has many engagement and business models including a renewable energy outfit using solar panels to power homes. This subsidiary is dubbed SolarCity, and the Ark Funds projections did not take revenue or growth from this business into account. Additionally, Tesla’s $1.5 billion Bitcoin (BTC) purchase and its potential revenue boost were also not taken into consideration in the computed pricing model.
In the model, Ark Funds calls for the average cost of Tesla EVs to drop from $50,000 as seen in 2020, to between $36,000 and $45,000 in the new price model. The firm projects as many as 5 to 10 million vehicles will be delivered by the company by 2025, up from 500,000 in 2020.
The new pricing forecast also included the firm’s insurance product, an offering that Ark Funds hopes the company will expand to other states beyond California in the near future. The new model also included assumptions that based on a 50% probability, the company will be able to roll out its robotaxi service through advances in autonomous self-driving cars by 2025.
Tesla shares make an important part of the two Ark Funds Catherine Wood oversees with the Ark Innovation ETF (NYSE: ARKK) boasting of 3.7 million Tesla shares worth $2.4 billion and the Ark Next Generation Internet ETF (NYSE: ARKW) holding 1.1 million shares held worth $752.5 million.
Tesla Price Target and the China Reassurance
The Tesla price target projections by Ark Funds came amidst a brewing report that China is barring the use of Tesla EVs by government personnel per claims the vehicles may be used in spying and sending data back to the US. Tesla CEO Elon Musk has however given his reassurance that no such thing exists.
“There’s a very strong incentive for us to be very confidential with any information,” Musk told the forum. “If Tesla used cars to spy in China or anywhere, we will get shut down.”
China is an important market to Tesla as the firm delivered 147,445 vehicles in the country last year, which accounted for 30 percent of its global total according to Reuters.