ARK Investment Management CEO Catherine Wood had an impressive 2020 with several of her company’s ETFs among the best performing. One of her best moments for 2021 may have taken place this week with a call from 2018 coming to fruition.
What Happened: Wood issued a bullish bet on Tesla Inc TSLA in February 2018, calling for shares to hit $4,000.
Taking a five-to-one split in August 2020 into account, shares topped $800 on Thursday, hitting on Wood’s original price target.
Wood said the bear case on the shares of Tesla was hitting $600, which would still be a double from the price at the time.
“If we’re right, this stock in our models is going to $4,000. If we’re wrong, and all they do is electric, our bear case is $600,” Wood said at the time.
Why It’s Important: Tesla is a top holding for Wood’s ARK ETFs and has helped the fund place among the best performers.
Wood had the highest price target at the time and was questioned for being too bullish on Tesla, but stood behind her high conviction play by continuing to hold shares. At the time the highest price target on Tesla was $500 per share, meaning Wood was twice as high with her target.
Even in 2020, analysts and investors try to decide if Tesla is an automotive company or a play on energy and automotive or a technology company.
“The future is transportation as a service, software as a service. This is where Tesla is going,” Wood said in 2018.
Given the debate today and the valuation for Tesla, it could be that Wood was spot on with this call.
What’s Next: Wood became even more bullish in February 2020, issuing a new bull case for Tesla shares to hit $7,000 by 2024.
Wood’s split-adjusted target price of $1,400 is based on Tesla seeing gross margins approach 40%, capital efficiency improving through production scale and the evolution of autonomous capabilities and penetration of autonomous taxi service.
Wood gives the $1,400 price target a 50% chance of hitting. The bear case of $300 is based on 3.2 million cars sold in 2024 and has a 25% chance of likelihood.
The bull case for Tesla from Wood sees shares of Tesla hitting $3,000.
TSLA Price Action: Shares of Tesla closed Friday up 7.8% at $880.02.
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