Featured image: Tesla
Tesla TSLA shares are a valuable asset, as the company has a great advantage over any other automaker. Cathie Wood, founder and CEO of ARK Invest, spoke about her unwavering belief in deeply disruptive technology companies such as Tesla.
She drew attention to the fact that TSLA shares in just 1 year has rose from $170 per share to $1,000 per share, which looks like a strong agrument. "If you looked at Tesla a year ago it had been trashed by hedge funds and many others, saying it is going to run out of cash. From one year ago when the stock got down to the $170s, to now, it just crossed $1,000, what you will see is that the balance sheet everyone was criticizing last year, today looks like a fortress compared to the balance sheets of traditional auto manufacturers," Wood told MarketWatch.
Now traditional automakers are in trouble due to the fact that they have not made the necessary changes to their companies on time. They refused to make a smooth transition from internal combustion engines to electric motors, that is why they are now behind Tesla, Wood said.
"Traditional manufacturers are in trouble. We've been trying to get that message out for a long time. Tesla was going to disrupt the traditional manufacturers which would have to make a number of great leaps to catch up. In fact, they've had to cut back on their investments. They haven't succeeded in switching from the traditional internal combustion engine. They can't get up to Tesla's standards."
Source: Cathie Wood / Twitter
Wood said that Tesla is moving towards autonomy, and artificial intelligence is a big part of this. Now, technology-oriented analysts are beginning to understand this and realize that Tesla is one of the biggest investment opportunities. This is what ARK Invest has long understood.
Wood said they had adjusted their base price for Tesla shares to $6,800 per share due to the influence of the coronavirus. However, she notes that there is something else that they think could raise shares price much higher. Wood says that Tesla is most likely to present its ride hailing service with human drivers this year. Tesla will sell a car for a down payment, and then the person buying the car will be able to pay the rest of it via their earnings.
"It's a really good idea and I think they're going to do it and we've just finished the modeling. It would take our price target up significantly. Compared to their current model, ride hailing is much more profitable, and I don 't think anyone has put that in their model."