Tesla is expected to fivefold its share price to $3,000 in 2025. Analysts at Ark Investment Management foresee an even more optimistic scenario. The firm sets the price target for Tesla at $4,000. Ark Invest assumes that the rapid development of the company’s self-driving taxi service and a significant expansion of the insurance business will boost its share price.
A team of experts at Ark Investment Management forecasts Tesla shares to reach $3,000 in 2025. They believe that Tesla could be worth up to $4,000 per share in a bull case and $1,500 per share in a bear case. The probability of the forecast is 25%.
Last Friday, Tesla shares closed at $654.87. In the best-case scenario, the carmaker’s market capitalization is likely to go as high as $3 trillion.
By 2025, Tesla’s car sales are expected to skyrocket at least ten times. The analysts even suggest the possibility of a twenty times spike in sales. Most likely, the price of electric vehicles will slump amid buoyant demand.
Last year, the company sold approximately 0.5 million vehicles at a selling price of $50,000 per car. If Ark Invest’s optimistic scenario plays out, Tesla’s electric car will cost $36,000 in 2025. Soaring share quotes, sales boom, and subsequent decline in the selling price will largely be driven by Tesla’s insurance business and self-driving taxi service. The probability of the electric carmaker achieving fully autonomous driving within five years also increased.
As for insurance, Tesla is likely to achieve better than average margin owing to the highly detailed driving data it collects from vehicles. Partnering with underwriters, Tesla introduced its insurance product in August 2019, which is currently available only in California. Nevertheless, Ark Invest analysts believe that the car manufacturer will expand the presence of its insurance offering in the next few years.
In the best-case scenario, Tesla’s operating income is estimated to increase by $20 billion in 2025. Ark Invest reckons that the company will launch a human-driven ride-hail service at first so that it can deliver a highly profitable revenue stream.
As a reminder, Ark Investment Management was founded by investor Catherine Wood. She is one of the most successful self-made women entrepreneurs according to Forbes. Catherine Wood has a net worth of $250 million. She is a big believer in Tesla. In fact, the company is the largest holding of ARK Innovation ETF. Wood invested in it even more amid a plunge in Tesla’s share. Bloomberg notes that Catherine Wood’s forecast for Tesla looks more promising in comparison with other analysts. Bloomberg experts are inclined to believe that Tesla shares will hardly surpass the $1,200 mark.
