Cathie Wood & Ark Invest EXPLODES Tesla Stock Thesis | Warning.

well Kathy Wood has a new massive price

Target out for Tesla but instead of

talking about 2025 in order to expand

the valuation and hit the news cycle

Kathy has decided to move out to

2027. generally Kathy talks about

five-year visions and the five-year

Vision has always been ending in 2025

but now that a couple years have gone by

it is time to talk about

2027 and Kathy Wood suggests that

Tesla's expected value per share is more

than 10 times what the share price is

today Tesla share price today is sitting

at

161.92 slightly trending down today but

what do we have here an expectation of

two thousand dollars per share two

thousand dollars per share divided by

161.9 puts us out actually at 12.3 X

from today's price

now why do they suggest this what do

their models show and what do we have in

the different cases well here we go Arc

has a model and their model projects the

following an expected value of two

thousand dollars this is their base case

scenario a bear case scenario with a 25

probability now Tesla ends up being

worth fourteen hundred dollars per share

so their bear case folks is that Tesla

only

6.7 or sorry 8.7 X's within the next

four years and the bull case is that

Tesla ends up being worth

twenty five hundred dollars or a

multiple of 15.5 x now let's understand

potentially why Tesla's perspective Robo

taxi business well according to orc be

the key driver contributing to what they

believe

58 of the value of the company and 45 of

their earnings that's because they

believe that cars will only represent

about 62 percent of the company's

Revenue uh at substantially lower

margins than Robo taxi network uh now

this is interesting because really

you're hitting on that sensitivity here

of a lot of people talking Tesla down

right now because margins have fallen

they're still phenomenal industry-wide

but they fell below expectations of less

than 20 percent gross margin so in other

words every 100 that Tesla makes per

vehicle their gross margin has fallen

below 20 dollars of gross profit per

vehicle and so I think this is sort of a

way to sort of defend and suggest hey

let the electric vehicle sell at a lower

margin but we actually think in a sort

of base case scenario that robotaxing is

going to massively Drive the value value

of this company that Robo taxi revenues

might only be 25 but because their

margins are going to be so high they'll

represent 45 percent of the company's

actual profits and 58 of the company's

value in other words

they believe at ARC that the car

business is only going to be worth

one-fourth of the valuation for Tesla so

in other words if we take two thousand

dollars per share by

2027. Kathy is suggesting that only 560

dollars of the share price will actually

be because of the car business so write

that out so you can see it of a two

thousand dollar 2027 Target you're

looking at five hundred and sixty

dollars of that would be because of the

cars whereas it appears 58 or

approximately

1160 dollars per share will be because

of Robo taxi so for example if you think

robotaxi is nonsensical then maybe your

price Target is 560 based on Kathy's

analysis plus of course a little bit of

revenue for stationary free energy

insurance and human driven ride hailing

now I actually think it's interesting

that stationary energy storage is so low

here given the explosion recently in

Tesla's storage uh division so this

would be a question that I have for Brad

is why such nominal forecasts for energy

storage it's possible that Arc believes

that energy storage will be a growth

business for Tesla but nowhere near to

the level that Robo taxi could end up

being or just really autonomy so let's

see what other inputs and outputs we

have here so in 2027 in a bear case

Tesla believes that or Arc it believes

that Tesla will sell 10.3 million

Vehicles wow whereas in the bull case

Arc believes that Tesla will sell

20.7 billion Vehicles now what's

remarkable is they've really reduced

their average selling prices

substantially here and now this could

potentially be a little bit concerning

given that in the last presentation that

Arc did they believed that in 2025 the

average selling price per Tesla would

actually be forty five thousand dollars

it appears to me that Arc has revised

their models to suggest Tesla is going

to sell vehicles a lot less per vehicle

than previously thought

however they're providing substantial

revenues because of electric vehicle

revenues we got those where is it here

it is autonomous ride hailing Revenue

now I think this really assumes that

Tesla is going to be able to get to not

just full autonomy uh at at you know a

level of 99 satisfaction but to a

hundred percent full autonomy because

the last thing you want are Teslas using

the uh last Hardware set which is most

Teslas uh that is a hardware three the

last thing you want are these tassels

being 99 effective but you still need to

have a human driver because even Kathy

believes that human-driven ride hailing

would be representative of a nominal

amount of Revenue relative to autonomous

now I think that's interesting because

Tesla hasn't even indicated any interest

yet in getting into

uh human driven ride hailing there is

talk about Robo taxi and there is talk

about that next Generation vehicle that

could be Robo taxi but so far we haven't

really heard about that because we're

just not at those FSD levels yet I did

notice that in their model it doesn't

appear that they're including FSD

Revenue but that's probably because

they're baking that into the average

selling price but that actually makes

the average selling prices look even

worse for these vehicles so I'm not

exactly sure where that FSD is unless of

course that's showing up in in the right

hailing segment segment which maybe it

is but I think there's a potential flaw

in not segmenting out the FSD so we

could see that a little bit more clearly

to understand okay how much do they

actually think these cars are going to

sell for and how much of that could be

FSD

either way the expectations here about

this massive Revenue Set uh from

autonomous ride hailing uh you know it's

I I don't know what to think about it

maybe I don't know what to think about

it yet because we're in a situation

where we haven't yet uh realized okay uh

what um what what does full self-driving

without a driver actually look like for

Tesla right so it's hard to speculate on

what this sort of autonomous ride

hailing Network could look like when we

haven't even gotten to that state of

Technology yet not only uh at a Tesla

but where we have it's been with a

totally different system if you look at

where we have achieved this sort of

self-driving like waymo it's a lidar

based system and theirs isn't perfect

but it's pretty good uh and in some

cases it drives around without a driver

it's pretty decent Tesla uses a

completely different system it's Vision

based rather than lidar based and more

sensor based so we haven't actually seen

Tesla be able to pull it off yet with

the exception of if you have FSD you

could drive around in your town and go

hmm Tesla can get through most scenarios

and I agree it could get through 95 of

my daily commute on basically full

autopilot but let's take a look at some

of the other comments made by Arc here a

recent flurry of progress in AI should

accelerate Innovation and autonomous

driving in the autonomous driving

industry in our view Tesla's vertical

integration strategy in Dojo training

supercomputers are a key competitive

Advantage suggest suggesting that

Tesla's plan to expand Dojo by two

orders of magnitude next year will help

the company shorten time between model

updates that's for your FSD model

updates a recent video of FSD software

updates uh or update includes One driver

who nearly completes a full ride hail

without touching the wheel the problem

is this nearly question right when is

that nearly going to go away when are we

going to get to without touching the

wheel at all yes we know that Tesla has

actually now over 150 uh let's see here

Tesla a own Fleet drives more than 120

million miles per day right but but in

over 1 million miles per day in FSD we

just got information from Elon Musk that

we're at 150 miles of FSD 150 million

miles of FSD uh driven miles which is

fantastic which is great uh Tesla's

Capital efficiency of course the company

is is one of the most efficient in terms

of factory production we hope that

continues that way uh and Tesla should

be able to grow quickly as the

expectation here uh they do give us a

6.6 billion dollar contribution to

Enterprise uh or two three percent

expected Enterprise Value in 2027. I

actually think that's relatively low

and I think we could see this battery

capacity for energy storage uh really be

a substantially a bigger percentage of

their uh of their valuation in the

future but then again Arc also has the

impression and they may be right that an

electron is an electron and that really

it's not that big of a deal to focus on

batteries you should be focused on where

the actual consumer value is because the

consumer doesn't care about the battery

they care about range and function and

use and the reality is they're right

about that now uh here they quote Elon

Musk or paraphrase him suggesting that

autonomous ride hailing will probably be

the biggest asset value in history this

is very optimistic assuming that Tesla

can pull off their FSD and I think

that's really where we want see they

even say themselves our simulation is

highly sensitive to the year in which

Tesla launches Robo taxis and I think

that all comes down to how great FSD is

now Elon Musk suggests FSD could be a

hundred percent done by

the end of this year but then again

we've kind of been hearing that for

years now so I think it still remains to

be seen when we're actually going to get

100 driverless Tesla and at that point

yeah maybe just maybe these projections

could be right but if it takes us

another 10 years to get to 100

driverless on a vision based system

these valuations fall apart and even Arc

realizes that's the Achilles heel in

this model in my opinion it's better to

take out any kind of expectations for uh

Robo taxis let that be the icing on the

cake and just look at Tesla as a vehicle

provider that also sells software and

for me those numbers put me well above a

400 price Target by 2025. if we get any

icing on the cake until or by then hey

fantastic and look I love hearing about

these high valuations because obviously

I'm a big uh a fan of Tesla I'm an

investor in Tesla and I'd love this to

happen I'm just not convinced that we're

just ready yet for this and I do also

think that it's interesting here that

they suggest in their five-year

investment Horizon that the Optimus

robot will basically not contribute

significantly to Tesla's valuation in

other words they're projecting no

progress on the robot or on the Optimus

so really Arc is saying the Optimus is

their icing on the cake I'm saying

Optimus and Robo taxi is the icing on

the cake for me I'm just gonna look at

this as a high margin business that's

selling a great product and a great

service for their customers and

hopefully that continues and I agree

with Elon Musk that the sunshine comes

out in 2024 and overall I'm pretty

bullish I'm also bullish on hopping over

to the course member live stream and

reminding you to join me in the course

member live streams tonight before 7 pm

today when we make that massive

transition and folks

see you in the next one but in the

meantime some pretty cool news there on

Tesla and uh hopefully you uh get to

participate in this uh

hopeful and explosive growth of Tesla

and this concludes Eric's peace on Tesla

thanks so much for watching I gotta run

to the course member live stream and

we'll see in the next one goodbye folks

[Music]

thank you

[Music]