Cathie Wood has long been optimistic about Tesla ( NASDAQ: TSLA ) . In fact, she made a name for herself for her asset management company (ARK Invest) in 2019 when she set a target price of $ 4,000 on the stock. Since then, stocks have suffered a <5-to-1 pision, meaning his original price target is now $ 800.
Of course, Tesla stock has hit $ 900 per share plus early this year. And although he's fallen 27% since then, Wood is more bullish than ever. In fact, ARK Invest recently increased its price target to $ 3,000 per share by 2025. This represents a 365% increase, or an annualized return of 47% over the next four years.
So should you add Tesla to your portfolio? Let's take a look under the hood.
Source of the image: Images.
The Tesla Present
Tesla is the leading manufacturer of electric vehicles (EVs) in the market. Last year, the company sold 499,500 electric vehicles, capturing 16% of the global market. And this momentum continued into 2021, as Tesla produced 206,400 vehicles in the second quarter, up 150% from the previous year.
This rapid evolution underscores one of Tesla's main advantages: manufacturing efficiency. In fact, CEO Elon Musk has often said that this would be the main long-term advantage of the company. company, and it now has data to support this assertion.n: Tesla posted an operating margin of 6.3% in 2020, the best in the industry.
How did this happen? Last year, Tesla stepped up production of the Model 3 and started producing the Model Y at Gigafactory Shanghai. This has made it possible to expand and locate its activities in China, offering a profitable alternative to importing vehicles. At the same time, the company began manufacturing the Model Y at its factory in Fremont, Calif., Further increasing capacity.
In both cases, the highly automated manufacturing approach and Tesla's scalability is paying off. The Model Y paid off immediately, marking the first time in company history that a new product has achieved profitability in its first quarter of production. Investors should expect this trend to continue.
However, while Tesla's performance in 2020 was impressive, the future of theThe business looks even brighter. Tesla recently unveiled its new 4680 battery cell, an innovative design that will cut production costs by 56%, increase the range of electric vehicles by 54%, and reduce capital expenditure by 69%.
On the latest earnings conference call, Musk said Tesla was about 12 to 18 months away from "volume production of the 4680 ". But on the bright side, he believes this technology will allow Tesla to build a fully autonomous $ 25,000 EV over the next three years. >
Source of the image: Tesla.
Future of Tesla
If Tesla does indeed build an autonomous VE over the next threeyears, it would develop the business market opportunity dr amatically. Rather than just making cars, Tesla could follow through on plans to launch a self-driving carpooling service, a market valued by ARK Invest at $ 1.2 trillion by 2030.
For add, Tesla could also sell its software d 'self-driving to other car manufacturers. In fact, Musk has already had "preliminary discussions on autopilot licensing. " Either way, this would transform Tesla's business, replacing its reliance on cyclical sales of hardware (i.e. electric vehicles) by very recurring revenue in the form of ride fares or software subion fees.
Of course, before you rush to buy the stock, investors should consider thevaluation of Tesla. The shares are currently trading at an absurd 19.8 times sales , while automakers like General Motors are trading for a much more reasonable price of 0.7 times sales.
However, in a decade this valuation might not seem so crazy if Tesla disrupts the mobility industry. For what it's worth, I'm a Tesla shareholder and wouldn't sell this stock if it was cut. half tomorrow. In fact, I would buy more.