Led by Cathie Wood, ARK Invest has made waves on Wall Street with some very high Tesla (TSLA) price targets over the last few years.
Last year ARK estimated that by 2024 TSLA would reach $1,400 per share (post 5-1 split). In a new research report published Friday, ARK now believes TSLA will be worth more than twice that, $3,000 by 2025.
To support the new target, analyst Tasha Keeney explained in a post to their website the model now accounts for some new and updated factors.
New to ARK’s analysis is Tesla Insurance. ARK estimates Tesla can achieve margins of around 40%, well in excess of what typical insurance companies are able to achieve. This is because of Tesla’s ability to gather highly detailed driving data from its fleet of connected vehicles, allowing them to offer dynamic pricing. Tesla will also be able to lower customer acquisition costs since they already have a large pool of Tesla owners eager to make the switch.
ARK estimates in their bear case that if 40% of Tesla’s fleet is on their insurance product by 2025, revenue would be around $23 billion per year. Or almost as much as Tesla made ($26 billion) by selling cars in 2020.
ARK now estimates the probability of a fully autonomous ride hailing service by 2025 to be 50%, up from their previous 30% estimation by 2024. Leading the increase is the possibility of a human-driven ride hailing service to arrive before a fully autonomous one.
“If 60% of its vehicles equipped with Autopilot were to serve as robotaxis, Tesla could generate an additional $160 billion in EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortization] in 2025.”
Tesla Energy & Bitcoin
Surprisingly missing from ARK’s analysis is Tesla’s energy storage and solar businesses. Elon Musk has said previously he believes Tesla Energy is the most under appreciated aspects of Tesla’s business, and could see it grow to overtake the automotive business in the future.
Unsurprisingly absent from their analysis is Tesla’s recent purchase of Bitcoin.
You can read the full report here.