Tesla's (TSLA, Financial) stock price has dropped by over 30% this year, yet many investors, including prominent fund manager Cathie Wood, remain optimistic about its future. Wood, known for her strong support of Elon Musk, predicts Tesla's stock will reach $2,600 in five years, a nearly tenfold increase from its current price.
Wood, the founder of ARK Invest, highlighted that Tesla's autonomous taxi business could eventually account for 90% of its valuation. She also noted that Tesla's advancements in humanoid robots have yet to be factored into ARK's price models. Despite competition from Chinese automaker BYD, Tesla remains competitive based on metrics like range and power.
As of March 24, Tesla was the largest holding in ARK's flagship Innovation Fund (ARKK), comprising 10% of its $5.8 billion allocation, down from nearly 16% at the end of 2024, largely due to Tesla's stock decline.
Interestingly, Tesla's stock surged nearly 12% on a recent Monday, leading the "Big Seven," as investors speculated that President Trump's tariff plans might not impact the automotive industry as severely as expected. Reports suggested a delay in automotive tariffs, alleviating concerns about Tesla's profitability.
Despite the recent rally, Tesla's stock remains down over 30% this year, with significant sales and delivery declines in key markets like Europe and China. Additionally, Elon Musk's involvement with the Department of Government Efficiency (DOGE) has affected Tesla's brand image.
Cathie Wood gained fame during the pandemic for her bold bets on stocks like Tesla, Zoom, and Roku. In 2023, she predicted Tesla's stock could reach $2,000 per share by 2027, as the company captures market share from traditional automakers. Last July, she forecasted that the launch of an autonomous taxi platform could drive a tenfold increase in Tesla's stock price.
Wood is not alone in her bullish stance. Retail investors have shown increased enthusiasm for Tesla stock, with 13 consecutive days of net buying, totaling $8 billion, according to JPMorgan's Emma Wu.
