2024 has been a tumultuous year for Tesla (NASDAQ: TSLA) investors.
For the first six months of the year, its shares drastically underperformed the S&P 500 and Nasdaq Composite as the stock cratered by roughly 20%. Nevertheless, longtime Tesla bull Cathie Wood of Ark Invest recently revised her price target for the EV stock. Wood is calling for Tesla shares to reach $2,600 by 2029 — 1,082% higher than its recent level.
While some investors may argue such a forecast is outlandish, I personally think Wood may be underestimating Tesla’s prospects.
Wood’s thesis hinges on robotaxis, but…
Tesla is a pioneer among electric vehicle (EV) manufacturers. After making considerable headway over the last several years, the company is now laser-focused on what it expects will be its next chapter — autonomous driving technology.
CEO Elon Musk is so compelled by the potential of autonomous driving that during the company’s latest earnings call, he said: “I recommend anyone who doesn’t believe that Tesla will solve vehicle autonomy should not hold Tesla stock. They should sell their Tesla stock. If you believe Tesla will solve autonomy, you should buy Tesla stock.”
That’s a polarizing statement, but those are pretty much par for the course with Musk. However, he isn’t the only one with a strong conviction that autonomous driving is an enormous opportunity.
In Wood’s latest model, she is projecting that subscriptions to Tesla’s autonomous driving software — dubbed full-self driving (FSD) — will be the major catalyst for the company’s future growth. In essence, FSD represents a source of high-margin recurring revenue for its EV operation.
Moreover, if the company ends up as the superior developer of self-driving technology, Tesla will have an enormous opportunity to disrupt areas such as rental car businesses, delivery services, and ride-hailing applications.
But while I understand the opportunities FSD presents, I think Wood is underestimating Tesla’s long-run potential.
Image Source: Getty Images
…what about robotics and energy storage?
Autonomous driving is merely an extension of…
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