Tesla stock (NASDAQ:TSLA) may have experienced a notable dive as of late, but Cathie Wood of ARK Invest has noted that she and her team remain incredibly optimistic about the electric car maker. Wood noted that ARK Invest is poised to release its updated forecast on TSLA stock in the next couple of weeks. And based on ARK’s observations about the EV maker, Wood noted that she and her team’s TSLA price targets would be considerably higher than before.
During her CNBC segment, the ARK Invest founder explained why she and her team now have more confidence in Tesla despite the arrival of competitors from legacy automakers. Wood explained that Tesla actually performed better than her already-bullish expectations, particularly when the company actually increased its market share in the electric vehicle sector as EVs from rival automakers were released. Wood also highlighted that Tesla’s self-driving strategy is shaping up to be extremely strategic, potentially allowing the electric car maker to take the lion’s share of the autonomous segment.
“We’re about to publish–I’m hoping it’s within a week or two–our new forecasts. Our confidence in Tesla has gone up for a number of reasons. One, it didn’t lose share of the electric vehicle market when all of the traditional luxury brand names started bringing their own electric vehicles to market. Now, we expected (TSLA) will lose share, but our expectation is that its share would go from 17% at the end of 2018 down to 11% as more electric vehicles were coming out. Instead, what happened was its share moved up to more than 20% and roughly 80% in the US market. Eighty percent of electric vehicles. So that’s the first source of confidence. Market share up, not down.
“The second is autonomous. We believe that Elon Musk, who, over the weekend, tweeted out that he would offer or Tesla would offer, FSD (Beta) to anyone who wanted it, saw an incredible burst in demand. So for him to be able to do that suggests to us that he’s going to be able to show us the way to autonomous much faster than most analysts and investors expect. So the probability we have put on Tesla really winning the lion’s share of the autonomous taxi network market in the United States, also has gone up. So you might imagine that price targets have gone up considerably,” Wood noted.
When asked about the possibility of Tesla entering a phase similar to Amazon–which grew rapidly but had its stock pushed down for almost a decade after peaking in 1999–Wood explained that the electric car maker would likely not have the same experience. The ARK Invest founder noted that Amazon’s stock slump actually represented a time when the e-commerce giant was investing all its funds into growing its business, which of course, paid off in the long run. Tesla, according to Wood, seems to have passed this point already, with the company investing aggressively and excelling in four key metrics.
“It is leading the charge, so to speak. So battery technology, costs lower than anyone else’s out there, and will remain lower. Artificial intelligence chip, it designed its own. No one else has designed its own chip. This is analogous to Apple in the day. Cellular companies Nokia, Ericsson, and Motorola, didn’t see the future. Apple did, and yet it couldn’t get Qualcomm or Intel to move quickly enough. It had to design its own chip, and of course, now Apple basically accounts for the lion’s share of all the profits from smartphones in the world. We think this is going to happen also with Tesla. Maybe not worldwide because we know China wants its own champion. But that AI chip that Tesla designed, our analyst said, was four years ahead of where NVIDIA was at the time.”
“They have more data collected than any other company by orders of magnitude, not just by any other company but by all other companies out there. Because the largest pool of data with the highest quality is going to win in the AI game. They have the largest pool of data. And finally, until very recently, Tesla was the only automobile manufacturer able to improve the performance of its cars with over-the-air software updates… What they’ve done is extraordinary, and I think this is their market share to lose. I think they’re in a very, very different place. Also, we’re not in the tech and telecom bust. We are 20 years later. All of the seeds for what is happening now were planted back then. Now they’re coming to fruition,” Wood remarked.
Watch Cathie Wood’s recent CNBC segment in the video below.
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