1. Tesla, Inc. (NASDAQ:TSLA)
Ark Investment’s Q4 2020 Investment Stake: $2.9 billion
Number of Q1 2024 Hedge Fund Investors: 74
Share Price Performance Since 2020 End: -15.87%
Tesla, Inc. (NASDAQ:TSLA) is one of Cathie Wood’s favorite stocks. It is the world’s largest pure play electric vehicle manufacturer, and along with making cars, the firm has a host of other products such as self driving, energy storage, and even robotics to target high growth industries. Yet, Tesla, Inc. (NASDAQ:TSLA)’s bread and butter are electric cars, and any turbulence in this market means that the stock ends up struggling. The past 12 month have been hard for Tesla, Inc. (NASDAQ:TSLA), as higher costs, supply chain problems, and growing competition in the cut throat Chinese electric market have weighed on investors’ minds. However, Tesla, Inc. (NASDAQ:TSLA) possesses key competitive advantages on the design and manufacturing fronts which enable it to utilize economies of scale to bring down costs and compete globally. Additionally, Chinese EVs have been recently the subject of tariffs in the EU, leaving the market open for Tesla, Inc. (NASDAQ:TSLA). Another catalyst to the stock can be the much awaited sub $25,000 electric vehicle, which when coupled with Tesla, Inc. (NASDAQ:TSLA)’s brand name could lead to a higher market share and allow it to solve the key problem of EVs being too expensive for mass adoption.
Having first bought the shares in 2016 when they were trading at roughly $16, Ark Invest was out with a bullish take on Tesla, Inc. (NASDAQ:TSLA) in June 2024. It shared that the launch of the Robotaxi could account for 90% of Tesla, Inc. (NASDAQ:TSLA)’s enterprise value by 2029 and electric vehicles could account for a quarter of revenue. Ark’s updated model shows a bear case share price target of $2,000 per share and a bull share price of $3,100. Baron Funds mentioned Tesla, Inc. (NASDAQ:TSLA) in its Q1 2024 investor letter. Here is what the firm said:
Tesla, Inc. designs, manufactures, and sells electric vehicles (EVs), related software and components, and solar and energy storage products. Shares fell 29.3% in the first quarter as the core automotive segment is facing headwinds due to a complex macroeconomic environment, factory shutdowns, growing competitive risks in China, and vehicle price reductions which are pressuring gross margins. During the first quarter of 2024, production was also negatively impacted by the Red Sea maritime supply- chain interferences, sabotage in a Tesla factory’s power supply in Berlin, and a factory closure for the launch of the refreshed Model 3. We remain shareholders. Tesla commenced delivery of its highly anticipated Cybertruck pickup, which features new technologies within the car and its manufacturing lines. Tesla also launched version 12 of its Full Self Driving product, which shows significant progress from prior versions and increases the probability that Tesla’s data collection at scale, and verticalized software and hardware approach will position Tesla as a leader in the future for autonomous driving and shared mobility. We also expect energy storage sales to continue to grow over the coming years as the adoption of renewable energy continues. Lastly, we believe Tesla’s core automotive segment will recover with the company remaining a leader in the EV market, which continues to expand with EVs still accounting for only around 10% of vehicle sales globally.
Even though Cathie Wood has held on to TSLA for dear life for years, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None.
