Betting on robotaxis and humanoid robots

Firm also sees possible Tesla-SpaceX merger within 5 years

Ark Investment Management CEO Cathie Wood [AFP]
Ark Investment Management CEO Cathie Wood [AFP]

Tesla's share price could reach $4,400 within five years, driven by rapid growth in new businesses including robotaxis and the Optimus humanoid robot, according to a new analysis from Ark Investment Management.

Ark Investment, led by CEO Cathie Wood, set a base-case price target of $4,400 for Tesla by 2031, according to Yahoo Finance on Tuesday (local time). The firm projected $5,000 in a bull scenario and $3,300 in a bear scenario.

The base-case target is roughly 12 times Tesla's closing price of $373.71 on Tuesday. Ark Investment said it derived the long-term price estimate using a Monte Carlo simulation incorporating 32 independent variables.

Ark Investment identified robotaxis as Tesla's primary growth engine, projecting that the segment will account for about 80 percent of Tesla's total enterprise value by 2031.

Tesla launched its robotaxi service in Austin, Texas, last year, and Ark Investment said the pace of service expansion and improvements to its Full Self-Driving software will determine how quickly the business scales.

Ark Investment also expects Tesla's Optimus humanoid robot to drive a significant share of the company's value appreciation. Under the base-case scenario, cumulative Optimus unit sales to external customers could reach about 1 million by 2031, generating $212 billion in related sales.

The firm also projected a sharp increase in Tesla's AI infrastructure spending to support these new businesses. Ark Investment forecast that Tesla's cumulative AI infrastructure investment will grow from about $7 billion at the end of 2025 to $225 billion by the end of 2031.

Ark Investment also expressed a positive view on a potential merger between Tesla and SpaceX, the space company led by Elon Musk.

Citing the two companies' joint pursuit of Terafab, a semiconductor production project, Ark Investment said "there is a possibility of a merger within the next five years." Should a merger occur, the combined entity's 2031 sales could reach $3.8 trillion, with earnings before interest and taxes of $2.7 trillion, the firm estimated.

The $4,400 price target, however, reflects Tesla's standalone valuation and does not factor in a potential merger with SpaceX.

Ark Investment added that the growth outlook could change if regulatory approvals and commercialization of the robotaxi business are delayed, or if Optimus technology development falls behind schedule.

Wood visited South Korea in June and said Ark Investment's Tesla price target was $2,600, noting the stock had more than sixfold upside over the following four years from its then-current level of around $400. She also cited the robotaxi business as Tesla's biggest growth driver at the time.


betterj@heraldcorp.com