You May Want To Consider Cathie Wood's Latest Guidance On This EV Heavyweight

Cathie Wood, the legendary fund manager behind ARK Invest, boldly predicted a couple of days ago that Tesla, Inc. (NASDAQ: TSLA) shares will reach $2,600 by 2029, surging more than 1,300% from the current price of around $185. Even in the bear-case scenario, ARK analysts expect Tesla shares to trade around $2,000 by 2029. The growing EV market and Tesla’s foray into the robotaxi market will boost corporate earnings in the future, supporting higher share prices.

Tesla, until recently, touted an ambitious annual vehicle delivery target of 20 million units by 2030, up from just 1.8 million last year. Although the company recently dropped this target from its projections, Tesla still expects to see exponential growth in vehicle deliveries in the next 5 years as the world embraces electric vehicles.

The growing robotaxi market will hold the key to ensuring Tesla shares hit these ambitious goals. According to Markets and Markets, global robotaxi market revenue will reach $45.7 billion by 2030, growing at a CAGR of close to 92%. Tesla is expected to be a frontrunner in this industry’s growth.

Do Wood's Words Matter?

Cathie Wood’s ARK Invest shot to fame during the pandemic days as the fund manager invested in highly popular names such as Tesla, Roku, Inc. (ROKU), and Coinbase Global (COIN). Cathie Wood has built a reputation around identifying innovative disruptors early on, which has led to growth investors following her for investing leads. ARK is also known for its high level of transparency, which is not common among fund managers. The fund discloses its holdings publicly, but going a step further, publishes its valuation models publicly, allowing retail investors to play with these robust models to derive conclusions of their own.

Of late, some investors have come to question Cathie Wood’s expertise on growth stocks because of the lackluster performance of ARK Innovation ETF (ARKK) following pandemic highs. However, it is important to note that Cathie Wood takes a long-term stance on her stock picks, and evaluating her performance based on short-term performance may not be ideal.

How Tesla Can Save Itself

Tesla has recently faced increased competition globally, especially from the likes of BYD Company Limited (BYDDF) which surpassed Tesla to become the best-selling EV brand late last year. However, Tesla is still well-positioned to achieve the level of success predicted by ARK by 2029.

First, Tesla’s gigafactories will contribute meaningfully to boost vehicle production in the coming years, enabling the EV maker to cater to the surging demand for EVs in developed markets. The company has already announced a $3.6 billion investment to expand the production facilities in Nevada. Second, Tesla is investing heavily in improving the battery technology used in EVs, which should result in higher driving ranges for its EVs, better performance, and even lower starting prices for EVs. Third, the company’s autonomous driving technology is considered industry-leading, and this is proving to be a value differentiator between Tesla and other EV makers. Building on this technology, Tesla will make early inroads into the robotaxi market as well, potentially unlocking first-mover advantages.

Dilantha DeSilva does not have positions in any of the companies mentioned. Stocks.News has positions in Tesla.