Ark Investment Management CEO Catherine Wood believes Thursday’s surge in Tesla stock is just the beginning of the rise.
Ark Investment Management founder and CEO Catherine Wood commented that huge jump in Tesla’s stocks that began yesterday after the company released its earnings is just “the beginning of an eventual rise to $4,000 per share and possibly beyond.”
And she might be right, because, even though the earnings were nothing special, they were still better-than-expected and at the stock ended yesterday trading with a rise of 17.67% to $299.68. However, at the time of writing, the stock was in a slight fall at premarket trading by 0.76% to $297.41.
Earnings per share of the American electric carmaker was $1.86, down from $2.90 in the same period last year but still better than analysts predicted – a loss of 42 cents. Earnings fell 54% to $143 million while automotive sales dropped 12.7% on an annual basis, to $5.13 billion.
Wood noted that “some of the shorts are covering” and that she thinks the shorts are “going to be forced to cover as time goes on.”
Speaking at the CNBC’s “Squawk on the Street” Woods said the Tesla bears are “stretching to make a negative case now.” She added the company saw strong growth in its revenue and unit sales “in an auto industry that is declining”.
“We think total auto sales have peaked. This is quite dramatic,” Wood said regarding Tesla’s financial report.
Just a little before Tesla reported its Q3 earnings, Ark sold 150,000 Tesla shares, but commented that its “conviction in Tesla has not changed.” Proof of that is the fact that Tesla is still the top holding in Ark’s portfolio. Ark analyst Tasha Keeney explained that the share sale was “more a portfolio management thing.”
The thing is, some of the Ark funds have rules that no stock can constitute more than 10% of the portfolio so this sell-off needed to happen.
Wood was always fond of Tesla’s stocks. Back in February 2018, she predicted that the company shall one day trade at $4,000 per share. These new happenings are therefore cementing her belief that Tesla is coming to the position of a leader in self-driving vehicles and that these steps are going to “rocket the stock” higher than ever.
“If Tesla does solve for full autonomy, however, and its electric vehicle (EV) production surpasses our bear case estimates, TSLA could scale significantly higher than our previous $4,000 price target during the next five years, thanks to our newly introduced bull case for electric vehicle volumes”, explained Ark earlier.
With more than 179 million outstanding shares, predictions that Wood has for tesla stock would create a stock market value well beyond $700 billion that would make the firm closer to the world’s biggest technological companies.
However, there is a rocky road ahead because, for now, Tesla’s market cap is a little bit over $53 billion and, from the past, we witnessed the volatility of the stock itself.
However, there was an almost similar jump in August last year when Tesla’s CEO Elon Musk made, now already infamous tweet about having “funding secured” and predicted the company’s shares will rise to as much as $420.
However, those plans were abandoned a few weeks later.
This tweet actually was a beginning of pretty much unstable year for the company that resulted in a September settlement with the Securities and Exchange Commission (SEC) removing Musk as chairman of the board claiming he made “false and misleading” statements.
Be it as it may, it seems that bad days are over.
“Today, in what manufacturers have on the road or have announced, nothing is matching the 2012 Tesla Model S. And the Model S of Tesla today is actually 40% better than seven years ago. So, that’s how Tesla turned from being a disruptive innovator seven years ago to, actually, an industry leader,” said New Street Research analyst Pierre Ferragu.
