Cathie Wood is making her way despite the criticism.
The star investor of the moment is following her lucky star, with very bold new predictions made by her firm about Tesla (TSLA) The electric vehicle maker is Ark Investment Management's biggest investment.
Ark seems to think that the value of its stake in Tesla will continue to increase since the fund has just raised the price at which it believes the stock will trade in 2026. And it's huge.
Tesla stock is expected to trade at $4,600 in 2026, according to the latest research report from Ark Investment Management. This is almost five times the price at which the stock of Elon Musk's company is currently trading.
Ark, Cathie Wood Predict Maddening Numbers
Tesla shares closed at $985 on April 14 on Wall Street for a market cap of $1.01 trillion. If the shares soared and reached $4,600 in 2026 as predicted by Ark Invest, the market cap would be $4.65 trillion.
These maddening figures are explained by the fact that revenue generated by the sales of Tesla vehicles will increase but also by the emergence of a new cash cow activity that would be robotaxi, says Ark.
"Tesla’s prospective robotaxi business line is a key driver, contributing 60% of expected value and more than half of expected EBITDA [earnings before interest, taxes, depreciation, and amortization] in 2026," Ark argues. "Across our simulation set, we expect electric vehicles to constitute 57% of the company’s revenue in 2026, albeit at substantially lower margins than robotaxi revenue."
Tesla was the top company in Ark Investment Management's portfolio as of December 31. The electric vehicle maker represented 7.9% of Cathie Wood's firm portfolio.
On April 7, Elon Musk promised that Tesla was working on a new car and not just any car.
"There's going to be a dedicated Robotaxi that's going to look quite futuristic," the tech tycoon said during the grand opening of a $1.1 billion Tesla factory in Texas.
For Musk, robotaxi means self-driving cars, capable of operating with no one inside and able to pick up passengers and deliver them to random locations. Basically, a robotic version of Uber (UBER) or Lyft (LYFT).
The robotaxi Tesla is working on will be a new model with a completely new design. But Musk didn't provide date of entry into production, and did not show a visual. The serial entrepreneur, however, did say that Tesla cars will be able to drive themselves by the end of 2022. Full Self-Driving (FSD) is the key for any robotaxi endeavor.
"Our simulation is highly sensitive to the year in which Tesla launches robotaxis," warns Ark but the fund says the midpoint of their assumptions "suggests that Tesla will commercialize autonomous ride-hail in 2024."
ARK estimates the market for autonomous ride-hailing at roughly $11-12 trillion. And Tesla would be one of the big winners with Waymo (Alphabet, (GOOGL)) and Cruise (General Motors, (GM).
Tesla Will Have Lower Costs, Bitcoin Benefits
In addition to robotaxi, Ark also sees lower manufacturing costs for Tesla vehicles and the company's investment in bitcoin as positives that will contribute to the stock price surge.
"Since 2017, Tesla’s capital expenditure per incremental unit of capacity has improved from ~$84,000, when the Model 3 was ramping, to ~$7,700," the firm says. "In last year’s model, we estimated that Tesla would spend $6,000-$8,000 per incremental unit of capacity in 2025."
However, "given its much better than expected capital efficiency we now assume that Tesla will spend $2,000- $7,000 per incremental unit of capacity in 2026."
Such a significant drop in costs should allow the manufacturer of electric vehicles to considerably improve its margins and consequently its profits. Tesla currently has four vehicle production plants located in three continents - Americas, Europe and Asia - enabling it to serve the major markets where demand for electric cars is strongest.
"The more important takeaway is that capital no longer is a bottleneck limiting its growth. Instead, Tesla should be able to grow as quickly as management bandwidth and supply constraints will allow," Ark says.
As for the impact of bitcoin, Ark announced that it took into account the high volatility of the king of cryptocurrencies.
"Though Tesla cannot mark bitcoin up given current accounting standards, we assume that investors will incorporate bitcoin’s impact on enterprise value at its market value in 2026," the fund says. "Bitcoin increases our 2026 expected price per share by less than 5%."
Tesla currently holds 43,200 bitcoins on its balance sheet worth $1.748 billion at last check, according to Bitcoin Treasuries.
Ark's previous prediction was $3,000 per Tesla share in 2025. Their updated prediction also has a bear scenario of $2,900 per share in 2026 and a bull case at $5,800 per share.
