The valuation of Tesla stock has sparked a divergence of opinions among prominent investors, with Cathie Wood of ARK Invest reiterating her bullish stance while others, like Clean Energy Transition fund manager Per Lekander, hold a more conservative view.
Wood’s valuation of Tesla at $2,000 per share in April 2023 represented a significant increase from her previous valuation of around $1,500 in 2022. However, the lack of an upward revision in her target price for 2024 suggests potential challenges ahead for Tesla. The company faced a setback in the first quarter of 2024, with deliveries declining by almost 9% year over year.
Wood’s optimism about Tesla’s future is largely centered on its potential in the self-driving Robo taxi business, despite some high estimates. ARK forecasts Tesla to sell around 10 million cars by 2027, generating $91 billion in operating profit. Additionally, ARK anticipates the robotaxi business to generate $130 billion in EBITDA by 2027. However, the realization of fully self-driving cars has proven to be more challenging than anticipated.
In contrast, Lekander’s valuation of Tesla at just $14 per share reflects a more cautious outlook. He views Tesla as essentially a no-growth car company, projecting earnings of only $1.40 per share in 2024. Lekander’s valuation is based on a 10 times multiple of his estimate, reflecting minimal growth prospects.
Despite differing opinions, Wall Street analysts are more optimistic, projecting earnings per share of $2.40 for Tesla in 2024. This optimism is fueled by expectations of future earnings growth, including the introduction of new models such as a lower-priced Tesla anticipated in 2025.
The vast disparity in valuations between Wood and Lekander highlights the uncertainty surrounding Tesla’s future trajectory. While Wood values Tesla at a staggering $6.3 trillion, making it the most valuable company globally, Lekander’s valuation places Tesla below General Motors and Ford Motor, at about $40 billion.
The average of these extreme valuations equates to around $1,000 per share, reflecting the wide range of perspectives on Tesla’s intrinsic value. With the average analyst price target sitting just under $200 per share, there is significant divergence in opinions regarding Tesla’s valuation.
Ultimately, the uncertainty surrounding Tesla’s valuation underscores the challenges of forecasting in a rapidly evolving industry. As Tesla continues to navigate its growth trajectory, investors will need to carefully weigh the various perspectives and factors influencing the company’s future prospects.