Ark Invest Updated Tesla 5 Year Price Target Will Be Over $6000 per Share

Ark Invest is increasing its 5-year Tesla price target to over $6000 per share.

They are now assuming that 37 million electric cars, trucks and SUVs will be sold in 2024. They had assumed that Tesla’s 17% market share for electric cars would decrease to 11%. They now believe Tesla will not lose market share. It is even possible that they will forecast that Tesla will grow its market share.

Tesla maintaining 17% global market share is a forecast that Tesla will sell about 6.3 million cars in 2024.

This would be about 77% year over year growth in Tesla sales volume from 2019 until 2024.

Year    Cars in Year    Total Cars   Percent Cost Reduction per Wright Law
2019     367000         800000
2020     649590        1450000       14%
2021    1149774        2600000       26%
2022    2035101        4600000       32%
2023    3602128        8200000       47%
2024    6375766       14600000       55%

For over 100 years, the auto industry has enjoyed an 85% learning curve – which has translated into a 15% cost decline with every cumulative doubling of units produced.

Tesla has made a total of about 800,000 electric cars by the end of 2019.

6.3 million cars at $40,000 per car would be $252 billion in annual revenue.

By 2024, Tesla should be able to build electric cars at about half its current costs. Tesla has about 21% margin on its $50,000 cars. This means Tesla cars currently have a cost of about $40,000. Tesla would be able to have costs of $19,000 in 2024. This would mean 33% margin on cars selling at $30,000. Tesla would have net income in the range of $50 billion. The level of profit and net income would depend upon how much is being spent for capital to build more factories and to launch new products.

If earnings were $50 billion in 2024 and growth was still that strong then the PE could be 50. This mean Tesla would be worth about $2.5 trillion in 2024. Maintaining strong growth and even higher earnings and PE would mean Tesla could achieve $4 trillion in stock value. This is just what utter domination of electric cars, batteries, and solar roofs would mean. There could also be the self-driving taxi service revenue as well.

Tesla will also have sales in energy storage, solar roofs, semi-trucks, software and service revenues. The additional non-car products could add 30 or more to Tesla revenue in 2024.

A forecast made at Hyperchart trends out to $180 billion in revenue for Tesla in 2024. Ark Invest could project nearly double the revenue in this Hyperchart for Tesla in 2024.

Written by Brian Wang,
Brian Wang owns shares in Tesla and other companies.