Why Cathie Wood's team expects Tesla's stock to rise by more than 1,000%

Ark Invest, the investment firm founded by Cathie Wood, has set a new base price target for Tesla shares—$4,400 by 2031—according to a research note published on October 20. This target implies a rise in the stock price of nearly 1,100% from current levels. Ark’s “bullish” scenario calls for an even more aggressive rally—up to $5,000—while the scenario Ark refers to as “bearish” projects a high of only $3,300. What is the basis for such an optimistic forecast?

Ark cites robotaxis as the main driver. According to the company’s analysts, in five years this business will account for about 80% of Tesla’s market value. By that time, Tesla will have brought between 8 million (in the base case) and 10 million robotaxis (in the optimistic case) to market.

Ark notes that robotaxis have the potential to significantly expand the passenger transportation market, while their low operating costs will ensure profitability even if fares are reduced. By using dynamic pricing based on demand and traffic conditions, a robotaxi network will be able to maximize revenue during peak hours and increase transportation availability during periods of low demand, the note states.

Ark's previous forecast, published in 2024, predicted that within five years, the robotaxi segment would reach about 90% of Tesla's market value. Analysts attribute the change in the forecast to the fact that, in their view, the Robot-as-a-Service business segment will accelerate its growth as robotaxis become more widespread.

Ark also suggested a possible merger between Tesla and SpaceX within the next five years. According to the company’s analysts, Tesla’s profitable robotaxi business could finance SpaceX’s ambitious plans to build orbital data centers, while SpaceX’s computationally intensive AI models could serve as the foundation for deploying Optimus humanoid robots. According to Ark, joint work on the Terafab project to establish in-house semiconductor manufacturing could alleviate chip supply constraints for both companies. In the event of a merger, Ark estimates the potential combined revenue of Tesla and SpaceX at $3.8 trillion, and EBIT at $2.7 trillion by 2031, with SpaceX accounting for about 62% of revenue and 69% of profit.

The unveiling of the updated Roadster electric sports car last week also prompted the new forecast. The unveiling took place at the SpaceX facility in Texas, nine years after Elon Musk first introduced the concept of the car. During the demonstration, the car—equipped with cold-gas engines and a suction system borrowed from SpaceX— drove up a curved ramp on its wheels, bounced, and flipped in the air upon landing, as well as jumped over several parked cars. Tesla plans to begin production of the model in 2028.

Ark Invest is one of the largest institutional holders of Tesla stock: as of the end of the second quarter, Wood’s firm held 2.8 million shares. For many years, Cathie Wood has remained one of the most prominent “bulls” on Tesla.

Tesla will report its third-quarter results after the market closes on October 21.

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