UPDATE: Fund Manager Sends Letter To Tesla’s Board Predicting $4K Per Share

AUG 23 2018 BY EVANNEX 84


Cathie Wood is founder and CEO of ARK Invest, an exchange-traded fund (ETF) company. Its ARK Innovation ETF was recently named “ETF of the Year” returning an impressive 87.4% in 2017 and just crossed over a billion dollars in assets under management. Weighing in on Tesla, Wood recently discussed her outlook on the Silicon Valley automaker.

***UPDATE: As promised, Cathie Wood published the open letter and sent it to Tesla CEO Elon Musk on Twitter. To read the letter in its entirety, follow the link in the tweet:

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: A look at Tesla’s Autopilot (Instagram: themaverique)

CNBC reports that Wood thinks “Tesla stock could go to $4,000 per share… [and] she plans to send a letter ‘today or tomorrow’ to Tesla’s board, outlining how she gets to that lofty number.”

“Our conviction has increased recently because of their new [Tesla Autopilot] chip. We think they’re three years ahead of any other auto manufacturer,” Wood said, also citing Tesla’s advanced battery technology. And there’s plenty more upside for Tesla according to the team at ARK.

Above: ARK Invest’s Cathie Wood talks Tesla (Youtube: CNBC Television)

So what might this letter to Tesla’s board say? Check for clues in ARK’s recently published research. Teased on the company website, ARK’s Tasha Keeny says, “ARK believes that analysts may be overlooking Tesla’s largest addressable market – autonomous mobility-as-a-service (MaaS).” And, “what we believe gives Tesla an edge is its data set and validation system given by its vast customer fleet… [albeit] once Tesla launches the Tesla Network, its autonomous ride-hailing network.”

So how big is the overall market opportunity? Keeny notes, “We estimate that net revenue for autonomous platform providers – those companies that own the software technology stack for autonomous ride-hailing services – should exceed $2 trillion by 2030, roughly equal to our expectations for automaker revenue at that time… In fact, ARK estimates autonomous platforms will be worth more than the entire $4 trillion global energy sector.”

Above: Model S at a Tesla Destination Charger (Image: Tesla)

Who’ll take the lead here? Keeny notes that “While Tesla’s autonomous progress is out of public view because of the way it tests its technology, its massive data library suggests it could have a lead in autonomous driving. While Google, GM, and others use fleets of autonomous test vehicles, Tesla is able to leverage its customer fleet to test Autopilot features in shadow mode, by running software in the background with no direct impact on driving, feeding valuable information back to Tesla.”

What about Google’s efforts (via Waymo)? Keeny adds, “It’s fair to assume that Tesla has collected billions of miles of data from its customer fleet, compared to the millions of miles that Google has been able to rack up. Tesla’s fleet size also could provide a more robust system to test features compared to Google’s hundreds of test vehicles.”

Above: Tesla’s Model X (Image: Tesla)

So when can we expect full self-driving capabilities from Tesla? According to Keeny, “Elon Musk has said that a fully autonomous version of Autopilot will be available in 2019. Given Musk’s history of stretch goals, perhaps this will translate into a 2020 or 2021 launch.” That said, “Elon Musk has a history of making the once-impossible possible, we wouldn’t put it past him.”


Source: CNBCARK Invest

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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84 Comments on "UPDATE: Fund Manager Sends Letter To Tesla’s Board Predicting $4K Per Share"

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$4.000. . was she high?
Just say no to drugs..

This was entertaining in a sad sort of way. Tesla bigger than Amazon? 5x the size of Boeing?

Reminds me. I need to stock up. I believe she is 10% correct, representing a market under-valuation of 30% or so.

Should have bought TSLA Monday, I did at 194, to close my 2 week short position.

You bought at 194 on Monday? To close a short? I will also have what you are smoking …

Sorry, 294… Typo…

Typo, outright lie? 220, 221. Whatever it takes.

I see what you did there. 😉

Maybe the Typo was in the purchase order! You should have Doubled it, in a Switch from Short Cover, to a Long Catch, catching the next upswing!

She’s talking about 2030, quite reasonable it will be $4k by then.

Okay, I missed that. So not quite as crazy as I thought. But even if the stock did rise that high, it would almost certainly split more than once before reaching $4000.

What do splits have to do with anything?

It has to do with the fact that almost certainly nobody is ever gonna pay $4000, or even $2000, for a single share of Tesla stock. When stocks get too pricey, the company splits the stock so it’s more affordable.

True with crazy high inflation.
iPhone 31 will cost $9500 by 2030.

She is bat shoot crazy… Listen to her explanation of why Tesla has so much upside? The new chip, and the self driving, neither of which are in service or even past beta testing.

A few months ago she was saying it is because other OEM’s cannot legally do OTA software updates. I almost fell out of my chair laughing when she said that.. Oh, and I totally forgot her claim of 80 to 90% margins as that is complete nonsense.


@David Green said: “She is bat shoot crazy…“

What if she (Cathie Wood, founder and CEO of ARK Invest, named “ETF of the Year”) is just 1/2 “bat shoot crazy” correct… or 1/4… or even 1/8?

Ms. Woods has a much higher score of placing winning bets than does Mr. Jim Chanos who is arguing the opposite of Ms. Woods on Tesla… Chanos says Tesla is “worthless”.

If I had to pick who is most likely correct I’d pick the better statistical proven track record: Ms. Woods.

…And by the way most of the hedge fund managers that are long on TSLA also have a much better batting average than hedge fund manager Jim Chanos.

Good Point, I do not think Tesla is worthless, hence closing my short position at what I felt was the bottom of the bear run on Monday, but as far as upside from here, I feel Tesla is high risk, and there are simply companies that have much more upside potential with less execution risk. I have a stake in BYD, and will take a stake in NIO when they IPO. I also bought some GM and Magna on recent downturns, fairly small holdings, just for fun.

@David Green said: “…closing my [Tesla] short position… have a stake in BYD…”

Likely smart call closing your TSLA short. I imagine there is a bunch of Tesla shorts tiptoeing to exit… don’t want to trigger a stampede.

Good luck on your BYD long… it should perform well next couple years considering BYD’s EV local market lead and forward local market upward potential.

I’d wager TSLA outperforms BYD minimum 3/1 over next 12 months… but I agree with you BYD likely less volatility risk.

For sure, I do not think Tesla is going BK… I do not believe that short thesis, but I do believe they have a mountain of challenges, and a limited product line, and earnings potential. One good recession, and Poof… gone. BYD is much different, they have 200K employees, and 1/3 are in R & D. They have their hands in electronics, car manufacturing, heavy truck and bus manufacturing, battery manufacturing, and are now building at least 5 different monorail projects 2 in countries other then China. Some of the technologies they are working on are pretty cool, but they are not nearly as flamboyant as Tesla, they are a “do” first, “talk” later company… I love it. I also like that the CEO does not tweet, or cause problems for employees and shareholders. Anyway, their stock was way down, so I jumped on for a ride, not idea if I will win or lose… No Shorty Air Force tracking BYD to let me know what is really going on. You might be right on Tesla outperforming BYD in stock value, but there is equally chance you might be wrong. For me if TSLA goes past 360, without a fundamental… Read more »

@David Green said: “..One good recession, and Poof… [Tesla] gone…BYD is much different… like that the [BYD] CEO does not tweet…”

A deep recession will greatly impact all car makers… 2008 recession illustrated that. No reason to think Tesla is somehow special there.

Good luck with your re-entry 360 TSLA short… seems you have perfect buy/sell short timing… a real ninja master of spotting top/bottom… almost like 20/20 hindsight vision.

Likely we will see 360 TSLA within next 30 days so I’ll mark that point as “David Green” and lets see where that takes you. As the Tesla going private momentum continues to pick up the dug-in Jim Chanos shorts will reluctantly start to pack it up and cover… no telling where that takes TSLA. The avail TSLA inventory not committed to go private might get supper tight real quick… you know what they say about supply & demand… that’s the other edge of the sword for shorting a stock that is highly shorted.

You won’t need to worry about BYD tweeting CEO… I’ve heard social media in China is highly monitored & regulated… say the wrong thing and get a cold knock on the door late at night.

fun pop quiz for @David Green:

if ~65% of TSLA shares elect to transition to private shares and that leaves ~35% public shares avail to cover ~22% uncovered shorts prior to go private event… what is the Wall Street vernacular term for that condition of supply/demand short squeeze? It’s a single word. Hint: Starts with an F.

Many of Teslas shares are held by funds that cannot legally transition to private, so they would have to be sold or transferred to other funds which is a slow and complicated process. If you notice, Cathie Wood is very against going private, hence her letter to the board. Also not sure if you are familiar with private company laws but the individual investor is locked in, no chance to hit the eject button any given day if there is trouble. Not sure I would want that with Elon running the show, as he is pretty much a bozo of corporate management.

If a person is counting on a short squeeze as their investment thesis, well, Blackjack gives you near 50-50 odds, and pays 100% per bet… See ya at the blackjack table…

DG said: “Many of Teslas shares are held by funds that cannot legally transition to private…”

Response: Not many but yes some (like Ms. Woods’ ETF)… likely their exit pre-private will more than be displaced by additional TSLA shares pickup by remaining institutionals that can & want to continue TSLA long post-private. As exampled by Ms Woods there is belief by some large institutionals that Tesla has tremendous upside and they don’t want to miss out… hence Ms Wood fighting hard keeping Tesla public.

DG said: “…Cathie Wood is very against going private…”

Response: As she should be… her ETF is public exchanged in-kind basket… her ETF is forced to exit TSLA as it goes private.

DG said: “…individual investor is locked in [a private Tesla], no chance to hit the eject button…”

Respnese: Wrong. Elon in his letter said there will be a structured get out option same as currently SpaceX… read his letter.

DG said: “…[Elon Musk] pretty much a bozo of corporate management…”

Response: “Bozo” = Tesla today is selling more EVs in North America and Western Europe (and soon also Australia) than any other car maker by a wide margin.

Short position is ~17% of total long position (35m of 205m), not 22%. ~5m of those shorts are convertible bond arbitrageurs, protected by anti-squeeze terms in the prospectus.

Even if 65% of all longs stay in, which is a reach IMHO, yo’ve still got 50m+ shares from funds and 10-20m retail shares which cannot, or do not wish to, stay in a private company. That’s more than enough for the 30m non-convert short position to cover.

@David Green said: “Short position is ~17% of total long position (35m of 205m), not 22%…more than enough [public TSLA]for the 30m non-convert short position to cover.”

I stand corrected…

I did not factor in that a few of the institutional held TSLA short positions have recently covered and exited after taking a punishing beating… the stubborn Jim Chanos gang remain… or at least some of them… he has had some defections… not everyone have Jim’s high pain level tolerance… as evidenced by how long Chanos held his Alibaba short before folding.

Regarding your comment that there is enough TSLA avail to cover open shorts I was not suggesting there were numerically not… I was suggesting that you get into very tight supply/demand to the point that lack of supply liquidity will quickly make it a supper sellers’s market drastically driving up TSLA… basically the shorts would at that point be standing atop a hanging gallows that they themselves constructed with no option to time wait it out… TSLA going private event becomes gallows pull-pin.

Can you say Qubit? You never know what Elon is working on lol

Elon is not working on much that I know of, he has a mountain of legal issues right now, and needs to do his best dance to stay out of prison.

You may be stupid, but at least you’re dishonest.

At a PE of 15 (about twice typical for an auto company) that would be about $50 billion/yr. profit. The auto business is brutally competitive and nobody really has a moat around their business, so methinks not likely.

And many here are forgetting Tesla is more than just cars….

It’s 95%+ cars. Solar is small and not growing. Energy storage is growing, but still small and negative gross margin. Musk’s earlier storage growth claims did not materialize. Even claims about existing systems are often not true – e.g. the 129 MWh Australia battery installation never was the “world’s biggest”.

Tesla gets all the PR because Musk is a terrific marketer. Just look at all the press they got for the 20 MW/80 MWh in San Diego last year (also incorrectly claimed as the world’s biggest). SDG&E since awarded energy storage deals, including bigger ones, to half a dozen other players. Why no more to Tesla? Same thing in Kauai – the initial Tesla system got all the press, but KIUC then did two bigger deals with AES and no more with Tesla.

Thank you, Doggydogworld. I get a bit tired of people insisting “Tesla isn’t an auto maker, it’s an energy company.”

No, Tesla is an auto maker which has a few minor sidelines. Maybe that will change in the future, but it’s certainly true now.

Tesla will be the first 1 Trillion compay

Apple already won that…

So has Aramco (if they want ahead with their IPO, not a public company).

car company…

Oil company


These two ladies should look at the worldwide competiition working on the same goals…

Dozens of companies with deep pockets.

PS: Here‘s a good chart from Bloomberg listing many if these companies and JVs / cooperations:


ARK seems to be ignoring the competition and the billions of USD invested in the sector.

Tesla is just one tiny player.

PS: The linked chart doesn‘t even include latest (Softbank…) investments in autonomous driving.

so you are validating her argument that MaaS is a hot breaking sector by showing how much other companies have been investing in it. And you are validating her thesis that Tesla is getting way more bang for the buck than massive companies spending way more, which will give Tesla a step up on their competition.

Thanks for straightening that out for us.

How is Tesla getting “more bang for their buck” in robotaxis? They have nothing that remotely resembles adequate technology for that market. Waymo’s service is in beta and launches commercially in a few months. Cruise is about to enter beta. If the market opportunity is huge, these guys (and/or a couple of ‘fast followers’) will ramp rapidly and leave Tesla in the dust. If it ends up being a niche market, as many “hot breaking sectors” do, it’ll never support ARK’s 4000/share valuation.

Tesla may have one trump card up their sleeve, which is
that they appear to be one of the only frontrunners in AV to be aiming squarely at consumers. Pretty much everyone else (Waymo, Uber, Ford, GM) all plan to release robo taxis first, then trickle the technology to the consumer.

They’re testing and training their technologies in controlled environments (geolocated fleets) rather than what Tesla appear to be doing, which is beta testing using consumers.

Tesla’s way may mean they get the first level 4 consumer vehicle on the road, but whether it will be the safest is another question.

I agree Tesla will probably lead in consumer self-driving.

This lady’s 4000/share and 80-90% gross margins are based on robotaxi, though. That’s a completely different market in which Tesla has no real shot to be a player.

Agreed, their model seems to be based on running a service using spare “capacity” from consenting owners vehicles, not owning the vehicles themselves.

full self-driving capabilities from Tesla in 2020 / 2021 (which I personally do not believe).
But assuming, the author is right – what does this mean for all the Tesla customers, who paid 4.000 USD for FSD in the last years, being told, that it is only a software update away?

My best guess is by the time full self driving is a reality, the only cars that will be able to do it will be the ones with the latest AI processor. So the question for those who paid for self-driving cars are not going to see it unless Tesla offers free processor upgrades. Even if they do, it could end up being a bargain for Tesla since many of the folks who paid for those upgrades will no longer have the car by that point, having moved on to a more recent model.

They’ve already said they’ll offer the processor upgrade.

I thought it was quite telling that the new Tesla processor is described as “drop-in”. Speaking as a computer programmer, I’m fairly certain that the current chip in Tesla’s cars is inadequate for full self-driving capability. It looks to me like Tesla realizes that the current chip can’t handle the processing necessary, and is planning to do a recall to upgrade that chip when they want to introduce true self-driving.

Personally I think that no mere computer chip is going to enable truly dependable Level 4/5 autonomy, and that Tesla will wind up having to put either a high-res radar array or else scanning lidar into its cars. If I’m right, then trying to retrofit current cars with that is going to create a huge mess for Tesla, either a mess with trying to actually retrofit cars with upgraded sensors, or a legal mess in giving refunds to everyone who has paid for the FSD (Full Self Driving) option on existing Tesla cars.

But that’s just my opinion. We will see what happens over the next few or several years.

You mean 2.0 is inadequate? and 2.5 is also inadequate? When Elon introduced 2.5 he said he thought 2.0 might not be strong enough, but 2.5 has definitely got what it takes… Now he needs new custom chips? What makes you think those are any better then his previous flawed estimates? BTW, Waymo uses Nvidia, and their cars drive on real roads in real situations autonomously every day, and have for millions of miles. As I read they are already up to a couple thousand miles between human interventions, and this is city driving, not highway, which highway is substantially more simple. Cruise Automation is nearly at the same level as Waymo, and just got a huge cash investment to take their development further. Tesla so far has not shown any Autonomous capability when it comes to completing a drive say from a home garage to the airport to pick up a passenger, and then back home parking in the garage, seems a simple trip that Waymo and Cruise have been doing thousands, or millions of times over the last couple years. Shouldn’t Tesla be testing these things before making claims of what there systems capabilities are, or will be?… Read more »

“Waymo uses Nvidia”

Pretty sure that’s wrong. They’ve used Intel processors for many years (pre-Mobileye).

I don’t need to actually read your wall of text post to know that it’s just as full of B.S. as everything you write about Tesla.

It’s not crazy. Look at market demand for the Model 3, not market supply. Can be estimated to be the top selling sedan in the U.S.

That’s the likely current demand for the Model 3. Tesla can’t make them, but if they could, they’d already have the top selling model in the U.S.

The entire WW Model 3 reservation is only about 500K at most. Corolla sells more than 1 million per year annually…

What folks like you fail to understand is you look at the current Model 3 list like it’s a finite amount, being reduced every week as cars are produced and names drop from the list. When, in fact, 4,000+ Teslas enter into the wild EVERY week, rolling advertisements, each car having many new eyeballs seeing and behinds riding in them. Which breeds more orders. Without advertisement, which is all Tesla has ever done- word of mouth. The list isn’t shrinking. It’s actually an opposite effect that’s happening. Every week, the awareness grows.

Yeah, but only so many people want a sedan, and have the money for a Model 3… BTW, the list is shrinking and Tesla did not make 4K model 3’s in the last 2 weeks, they have slowed way down…

I sure hope the reservation list is shrinking, since they stopped taking reservations and nobody on the planet Earth can put their name on any reservation list anymore. If the list were still growing after they stopped taking reservations anywhere on the planet for the Model 3, then it would just be aliens getting on the waiting list and growing it.

Wait, you must be saying that the the Roadster launched into space was actually an advertising sample!! It must be an illegal interglobal bait and switch where they are showing aliens the Roadster and then selling them Model 3’s instead, right?

Man, thanks for tipping us. Where would we be without you. Are you a grey or a blue alien coming to help us all out?

“nobody on the planet Earth can put their name on any reservation list anymore.”

Europe and Asia aren’t on planet earth?

Only current Markets have removed the Reservation process: USA & Canada!

“BTW, the list is shrinking…”

It’s possible to tease out one bit of actual truth here, buried in all the FUD. It may be misleading but technically this is true, since Tesla is no longer taking reservations for the Model 3.

Per “Tesla is no longer taking reservations for the Model 3.”, only true in North America: Specifically, Canada & USA!

Okay then, point taken… his statement was, as usual, complete and total B.S.

My bad. 🙂

That’s idiotic. The Bloomberg tracker has them at over 6,300/wk right now.

The “tracker” doesn’t really track. It estimates based mostly on Tesla’s VIN registrations plus some buyer reporting. Tesla registered 30k VINs in the two weeks from 8/5-19. Bloomberg converts that to a 15k/week production rate. They filter it heavily, but a jump like that still has an oversize effect.

Buyers recently reported receiving VINs from 10,xxx to almost 100,xxx. The bulk of reports are between 40k and 80k. It’s getting too wide to be useful.

Thank you! You’re absolutely right, it shouldn’t be called a “tracker” at all.

Indeed.. it isn’t like the demand will dry up once the waiting list is filled. I mean, Tesla is still finding new customers for S and X and they haven’t had waiting lists on those for a long time. Plus, they do virtually zero advertising at this time.

Wait, I thought the sales of S/X would dry up completely when the Model 3 hit the market. Did that bit of short wisdom not pan out?

Thank you for that reality check. It often seems like comment threads here get drowned in the sometimes overwhelming amount of FÜD.

The reservation list is an anomaly in the automotive world. What’s the reservation list for the Corolla? Zero. People just go buy it. Tesla’s models are new and in demand and people are willing to plunk down $1,000 to get a spot in line. But if you think the reservation list is the sum total of their demand, you’re missing the point.

I don’t have any reservations currently but plan to buy three of them in the next few years. Maybe four.

Lol😭😭😭😭😭😭😭. Camaryand Accords are staples

So, if by some miracle Tesla manage to outsell a mass market sedan (like the Corolla) then that means a million Model 3’s a year (possible in future with their new plants). – doubtful though, unless Tesla really can drop the price to $25k in a few years.

That still gives them a sales volume less than BMW, so that means their market cap should be about half what it is now, not 10x what it is now.

How much of Tesla’s share price is based on future promise and hype (organisations investing shorter term as a way of making profit rather than long term stable investment) would be interesting to know.

Stop using drugs

More proof that we’re in a bubble. But this time it’s different.

I am waiting to buy Tesla shares when they finally reach the $4.20k price target.

The $4.0k per share price, seems like a bit too much of a value play.

What if Tesla is secretly working on quantum computers that will make fully autonomous vehicles a reality…GO TESLA GO

And what if they are working with magic unicorns, with digestive issues? – Given Elon’s posts, that seems more likely:


Read my text Q-U-B-I-T

Full autonomous driving is decades away. Who wants a car with 99.9% effective autonomous systems? It would be like signing up to play Russian roulette. No one will be alert to the 1 in 1,000 situation when they have to intervene.

I’m not so sure about decades, an awful lot of cumputer advances can happen in that time frame. That said, L5 cars aren’t due in a year or two…


“Full autonomous” isn’t a practical goal. She’s talking about robotaxis, which are already deploying.

“Who wants a car with 99.9% effective autonomous systems? It would be like signing up to play Russian roulette.”

Are you suggesting human drivers drive safely 99.9% of the time?

I think an autonomous car which drove safely 99.9% of the time would be an orders of magnitude improvement over the average human driver.

“The thing to keep in mind is that self-driving cars don’t have to be perfect to change the world. They just have to be better than human beings.” — Deepak Ahuja, CFO of Tesla Inc.

This analyst is suggesting a TSLA stock price of $4000, when (if my Google-fu is strong) the highest it’s ever been is $389.57? There’s being bullish… and then there is being absolutely bugf**k crazy.

Can you say “pumper”?


Ms Wood’s $4K is future dollar value (not constant dollar indexed) which Ms. Woods in above video goes on to say on a NPV discount basis (@15%/yr discount) she values TSLA at $2K.

I’d ask for that to be translated into English, but… This is a fine example of why I treasure my ignorance of financial matters.

Also, I wrote that comment before reading Roy_H’s comment above: “She’s talking about 2030, quite reasonable it will be $4k by then.” In light of that, her pumper claim appears only rather questionable, rather than outright crazy.

However, I thank you for trying to explain.

If discounted 15%/yr. until 2030 it would be $569. ($4000 x 0.85 twelve times if I understand what this NPV discount means which I may well not.)