2024-06-21 07:00:00 ET
Summary
- Fund manager Cathie Wood made headlines with her $2,600 5-year price target for Tesla, Inc., with a best-case scenario of $3,200, 17X upside by 2029.
- Her thesis is that 90% of Tesla's value will come from licensing its self-driving tech, thus capturing much of the $9 trillion revenue of the robotaxi industry by 2030.
- Robotaxis will likely cost $150K to $200K each, and building a global fleet would cost over $35 trillion. Only Amazon and Alphabet's Waymo have the necessary cash flow.
- Amazon's current consensus free cash flow of 41% through 2029 justifies a 300% return, or $965 per share, within five years. It could boost your income growth by 2% to 4% through annual rebalancing.
- If Cathie Wood is right about robotaxis, Amazon's potential upside, through its Zoox subsidiary, is as high as 18X in the best-case scenario, higher than Tesla's (9% faster income growth). And if robotaxis fail, Tesla is in trouble (according to CEO Elon Musk). Amazon investors still own Amazon, which is expected to generate $700 billion in free cash flow through 2029.
Cathie Wood is renowned for her, let's say, somewhat optimistic forecasts on Tesla, Inc. ( TSLA ).
Cathie Wood's Tesla Price Forecasts For 2029
- Bear Case Target: $2,000 per share by 2029 (25th percentile outcome)
- Base Case/Expected Value Target: $2,600 per share by 2029 (50th percentile)
- Bull Case Target: $3,100 per share by 2029 (75th percentile outcome).
Cathie Wood's eye-popping bullish case on Tesla is a 17X return over the next five years, or 76% annual return potential.
We think that the robotaxi opportunity, globally, will deliver $8 to $10 trillion in revenue by 2030." - Cathie Wood .
An ARK Invest report from February 2024 highlighted that they see robotaxis "transforming global transport with point-to-point transportation to be available in nearly every country at an average price of ~ $.50 per mile ." They project that robotaxis will have traveled 13 trillion vehicle miles by the late 2030s....
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For further details see:
6 Reasons Tesla's $9 Trillion Robotaxi Dreams Will Likely Fail