Tesla (TSLA) has been battered this year, with its stock price tumbling under the weight of intensifying competition, sluggish international sales, and, of course, CEO Elon Musk’s growing political entanglements. Ironically, Musk’s close ties to President Donald Trump initially boosted Tesla shares in late 2024, as investors wagered that Trump’s pro-business policies would lift the company’s prospects and Musk’s other privately held ventures.
However, investors didn’t seem to expect that Musk’s role heading up the Department of Government Efficiency (DOGE) would be so controversial. The backlash has been brutal, with Tesla showrooms turning into protest sites. Even Trump’s recent high-profile Tesla car purchase failed to stop the bleeding, as the once-dominant electric vehicle (EV) maker sank to the bottom of the elite “Magnificent Seven” group this year.
Yet, surprisingly, amid this chaos, one legendary investor remains unwaveringly bullish on Tesla’s future. Cathie Wood, the founder of ARK Invest, is known for her bold, forward-thinking bets on disruptive technologies. Her unwavering conviction in innovation has made her a closely watched figure in the investing world. And when it comes to Tesla, Wood isn’t backing down just yet. In fact, the tech investor has recently grabbed headlines with her prediction of Tesla hitting an eye-popping $2,600 by 2030. Given this backdrop, let’s explore what’s driving Wood’s unshakable confidence in the EV giant despite its recent setbacks.
About Tesla Stock
Why Tesla (TSLA) has been a longtime favorite of Cathie Wood is quite evident, as the company is far more than just an EV giant and aligns perfectly with her investment philosophy. Beyond its EV dominance, the Texas-based company’s expansion into energy storage, automation, and robotics reflects the disruptive innovation Wood actively seeks.
Presently commanding a market capitalization of approximately $875.1 billion, Tesla shares climbed almost 52% over the past year, hitting a December peak as hopes for a Trump-era regulatory lift sparked investor enthusiasm. But 2025 has been a rough ride. While the stock has bounced back roughly 15.6% in the last five days amid investor optimism that Trump’s tariffs may be softer than expected, TSLA is still deep in red this year, down a notable 32.4%.
But even after its struggles this year, TSLA continues to command a premium valuation. Trading at an eyewatering 117.1 times forward earnings and 9.49 times sales, the stock is priced significantly above its sector medians of 15.11x and 0.89x, respectively. While such steep multiples may raise eyebrows, they also reflect investors’ enduring faith in Tesla’s long-term growth potential.
Tesla Misses Q4 Earnings Forecasts
The car maker dropped its 2024 fourth-quarter earnings on Jan. 29, but the results left much to be desired. Revenue inched up just 2% year-over-year to $25.7 billion, falling well short of analysts’ $27.1 billion projection. Meanwhile, adjusted EPS rose a mere 3% annually to $0.73 and missed Wall Street’s target by 4.8%. While Tesla’s latest earnings revealed impressive growth in its emerging segments, it also highlighted cracks in its core automotive business.
Energy generation and storage revenue surged a stunning 113% year-over-year, while services revenue climbed 31%, showcasing strength beyond EVs. However, the automotive segment, the heart of Tesla’s business, took a hit, with revenue sliding 8% to $19.8 billion, down from $21.6 billion a year ago. The decline was largely due to lower average selling prices across its Model 3, Model Y, Model S, and Model X lineup.
On the brighter side, management painted an optimistic outlook. The company made some bold claims in its Q4 shareholder deck, calling 2025 a “seminal year” in Tesla’s history. The EV maker’s autonomous ambitions are in full throttle, with a major focus on advancing its Full Self-Driving (FSD) technology. The company is aiming to surpass human safety standards and plans to introduce an unsupervised FSD option for customers.
Meanwhile, Tesla is gearing up to launch its highly anticipated robotaxi services in select U.S. regions later this year, marking a major milestone in its self-driving roadmap. On the global front, the EV giant is accelerating its FSD (Supervised) expansion, with plans to roll out its cutting-edge autonomous tech in Europe and China by 2025.
Why Is Cathie Wood Betting Big on Tesla Despite Its Struggles?
Cathie Wood appears overwhelmingly bullish on Tesla’s long-term prospects. In a March 25 interview with Bloomberg TV, the famous tech investor predicted that Tesla could skyrocket to an astounding $2,600 by 2030. Her bullish conviction hinges largely on Tesla’s robotaxi ambitions, which she believes will be the driving force behind the stock’s future value.
Wood forecast that robotaxis will account for 90% of Tesla’s value within five years, thanks to their lucrative software-as-a-service (SaaS) model. With 80%-plus margins, she expects robotaxis to be far more profitable than Tesla’s EVs, which currently deliver 15%-25% margins. Beyond robotaxis, Wood is also optimistic about Tesla’s humanoid robots, noting they are integrating into the company’s ecosystem faster than expected, potentially adding another massive growth driver.
She also pointed to catalysts like the refreshed Model Y and Tesla’s anticipated affordable EV, which she believes will tap into “pent-up demand” in the U.S., boosting sales. On the political front, Wood downplayed Tesla’s current struggles, predicting that the controversies will eventually fade, and highlighted the government’s crackdown on vandalism targeting Tesla’s EVs as a positive step.
In fact, despite the current volatility, Tesla remains the top holding in Wood’s flagship ARK Innovation ETF (ARKK), accounting for almost 11.4% of its total holdings as of March 27. And if Wood’s bold prediction proves right, it would mean a jaw-dropping 852% rally for TSLA shares in the next five years.
What Do Analysts Expect for Tesla Stock?
While Cathie Wood remains fiercely bullish on Tesla, Wall Street is still playing it safe, sticking to a consensus “Hold” rating overall. Of the 40 analysts offering recommendations, 15 back it with “Strong Buy,” three give a “Moderate Buy,” 12 advocate a “Hold,” and the remaining 10 maintain “Strong Sell.”
The average analyst price target of $338.39 indicates 24% potential upside from the current price levels, while Wedbush’s Street-high price target of $550, reiterated earlier this month, suggests that TSLA could rally as much as 101% from here.
