Ark Invest founder Cathie Wood appeared on a Twitter Spaces hosted by Cardone Capital’s Grant Cardone late on Wednesday in which she discussed a host of things ranging from her company’s investment approach, the emerging futuristic platforms, technology in education and her favorite stock — Tesla Inc. TSLA.
What Happened: Cardone asked a hypothetical question regarding Wood’s investment choice if she were to win a million-dollar lottery, and as part of the winning conditions, she is asked to pick one stock in five years and hold it for the next 10 years.
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Wood was spontaneous and said Tesla would be her choice, especially as the stock has been pummeled recently. After plummeting 65% in 2022, the stock has begun to turn the corner this year. On Wednesday, the stock settled at $181.41, up 4.73%, according to Benzinga Pro data.
Wood alluded to Ark’s valuation framework for Tesla, which the firm has published on its site. She said that the $180 invested now, if held and not traded, will scale to $1,500 in the firm’s base-case scenario. In reality, it could be north of that, she added.
“So, almost ten folds in five years,” the fund manager said.
Explaining the logic behind the deduction, Wood noted that electric vehicles have entered the sweet spot of their S-curve and Tesla is leading the charge.
Robotaxi, A Huge Opportunity: Just $500 of Ark’s $1,500 valuation for Tesla corresponds to the EV part of the story, the stock picker said. In order to get the remaining $1,000, Tesla will have to be in the pole position with its autonomous taxi platform at least in the U.S., she said.
Wood didn’t seem to have doubt on that count. There aren’t going to be many winners there, she added.
The Ark Invest founder, however, does not deprecate the EV side of Tesla’s business. If the rest of the automakers match Tesla’s prices for vehicles with the same performance and range as that Tesla, they would probably lose money, she said.
She added that it will be very difficult for other companies to keep up.
Wood also highlighted the huge profitability of the autonomous platform. The autonomous platform will be more like a software-as-a-service compared to an automotive model. While the automotive gross margin could be in the 20-30% range, the autonomous gross margin could be as high as 80, she noted.
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