Tesla: $3,000 a Share by 2025 - Highly Unlikely
The Ark Invest ETF fund, known for its belief in the future of Tesla, has released an updated forecast for the automaker's shares. According to analysts, by 2025, TSLA quotes will grow to $3,000. Below are the reasons that should contribute to such an active rally, but first we note the fact that in its forecast for 2020, Ark Invest was wrong on literally all points: from production to gross margin figures. The stock has risen significantly in the past year, but this happened against the background of speculation from retail investors and inclusion in the S&P 500. Thus, releases from Ark Invest should be treated with the utmost caution.
The fund believes that Tesla's revenue will reach $42 billion, and operating profit – $20 billion due to the development of the automatic taxi service. Let's say that the company does launch this business, but the probability that it will be able to achieve such a high profitability is incredibly small. For example, Uber (a service that has long been on the market) at the end of 2020 received an operating loss of $4.86 billion.
In the calculations of Ark Invest, the number of 1 billion appears – that is how many shares of Tesla, according to analysts, will be on the market. At the moment, there are 1.124 billion of them. It is quite possible that to increase the volume of car production to 5-10 million units per year (Ark Invest expects), it will be necessary to attract additional funding, including through the placement of shares. However, even if this is not required, the company is unlikely to find "extra" money to buy back about 13% of its own shares.
Ark Invest also hopes that Tesla's insurance business will be able to generate $23 billion. There is no point in discussing this topic for a long time. Just to remind you that the market giant Progressive, whose field of activity goes far beyond car insurance, earns only half of this amount.