Cathie Wood’s new Tesla price target has come out

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Founder of ARK Invest i

Tesla

bull Cathie Wood has released a new Tesla target price. He’s a doozy.

Wood expects Tesla to reach $ 3,000 per share by 2025. This means that Wood expects to earn approximately 50% annually on average by 2025 according to Tesla’s closing price (marker: TSLA) of $ 654.87 per action.

This will make Tesla worth approximately $ 3.6 trillion based on outstanding actions, including options on management actions and other potential actions.

apple

(AAPL), by comparison, is worth about $ 2 trillion today. Apple should earn about 30% a year on average to maintain its most valuable American business title.

A target target set in 2018 was $ 800 per share. It was an aggressive target at the time, as Tesla shares were trading around $ 70. But the shares reached $ 800 in early 2021, which was an average investment of 100% annually since early 2018. It has been an amazing race.

One of the most important reasons for the new pricing goal seems to be greater potential for a taxi business to drive automatically.

“In our latest valuation model, ARK assumed that Tesla had a 30% chance of driving fully autonomously in the five years ending in 2024,” the ARK research paper says. “Now, ARK estimates the probability will be 50% in 2025.”

Armed with autonomous driving, the Tesla-operated robotaxis could translate into $ 160 billion in additional EBITDA (earnings before interest, taxes, depreciation and amortization) for the company. Tesla generated about $ 4.8 billion in Ebitda this past year.

Tesla’s management, for its part, aims to grow by 50% of the unit volume per year on average in the foreseeable future.

De Barron recently figured out where Wood’s new price target might land. Our estimate was $ 2,300 per share. It was not a foundation-based projection. Instead, Wood said De Barron Jack Hough, who expected the shares to work substantially better than his 15% return barrier rate for buying a share. We believed that an average annual yield of about 30% was substantially higher than 15%, but we were low.

Tesla shares have recently hit a hurdle. Higher interest rates have affected more than other high-growth stocks like Tesla. For starters, higher interest rates make it more expensive to finance growth. Second, high-growth companies generate most of their cash flow in the future. Higher rates make the promise of future cash a little less attractive, relatively speaking, than a higher yield on current bonds.

The yield on the 10-year Treasury note has recently risen above 1.7%, up 0.5% in recent weeks.

Shares of Tesla have fallen about 7% to date, following comparable returns of Tesla

S&P 500

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Dow Jones industrial average.

Shares are up about 27% from a 52-week high in January. At that time, the yield on the 10-year Treasury bill was about 1.1%.

Write to Al Root at [email protected]