It's no secret that Cathie Wood has long been a fan of Tesla (TSLA 8.04%). The founder and CEO of Ark Investment Management first bought the stock in 2016 and has since made the electric vehicle (EV) maker a cornerstone of its holdings. In 2018, Wood made the then-bold proclamation that Tesla stock would eventually be worth a split-adjusted $267 per share -- an increase of 1,100% -- pushing the company's market cap to $672 billion -- a benchmark it has now far exceeded, at more than $800 billion.
Wood has put her money where her mouth is. In all, three of Ark Invest's exchange-traded funds (ETFs) combined hold more than 3.5 million shares of Tesla stock, worth roughly $899 million, which represents more than 7% of Ark Invest's total net asset value of nearly $12 billion.
The potential for Tesla to be a leader in the robotaxi revolution has long been touted as the reason for Wood's unfaltering belief in the company. In a recent interview, however, Wood gave insight into why Ark is so heavily invested in Tesla -- and her reason might surprise you.
Image source: Tesla.
In a word: Musk
While Wood is clearly enthusiastic about Tesla's future prospects, investors might be surprised to know that Elon Musk -- Tesla's high-profile CEO -- is the primary reason for her enthusiasm. Wood has previously called Musk a "renaissance man," going as far as to say, "He is the inventor of our age."
It's hard to argue with Musk's bona fides. After profiting handsomely from his early investment in PayPal, the enigmatic entrepreneur has founded a veritable laundry list of tech start-ups, including Tesla, space exploration company SpaceX, tunnel builder The Boring Company, brain-machine interface company Neuralink, and artificial intelligence start-up xAI.
Wood believes that Musk thrives on challenges, always looking for the next problem to solve. "Difficult times spur Elon's creativity," Wood said in an interview with CNBC's Bob Pisani on Monday. She goes on to describe Musk as "a troubleshooter and a brilliant technologist."
It's this tenacity, Wood told Pisani, that will ultimately lead Tesla to be successful in developing full-self-driving capability: "We think that each time he [faces] turmoil like this, the intensity of his brain cells takes him to new answers. We've seen this at Tesla every step along the way."
Looking back at Musk's history, it's hard to argue with Wood's logic. In 2006, Musk released the very first version of his Master Plan, which was elegant in its simplicity (though more easily said than done):
- Build sports car.
- Use that money to build an affordable car.
- Use that money to build an even more affordable car.
- While doing above, also provide zero-emission electric power generation options.
Musk has achieved each of his initial goals with the release of the Tesla Roadster, the Model S sedan, the Model 3, and his connection to (and eventual purchase of) SolarCity -- now called Tesla Solar.
His accomplishments thus far give Wood confidence that Musk will succeed. Wood said that now that EVs are scaling, Musk can focus on the autonomous side and that Tesla is close to completing its latest software upgrade. She told CNBC that Tesla thinks it is close enough to completion that it is already hiring ride-hail experts in different cities around the country.
Wood left no doubt about what happens if Musk succeeds: "This is going to be a game changer."
Ride hailing's future
To be clear, Wood is still a firm believer in the potential for robotaxis to transform the highways and byways of the world. Recent advances in the field of generative AI have brought us one step closer to a driverless future.
Wood has long touted the potential for the autonomous ride-hailing -- or robotaxi -- market, which she values at $11 trillion. She further suggests that Tesla will be among the first to capitalize on this massive opportunity. That plays heavily into Ark's base case thesis that Tesla stock could climb to $2,000 per share by 2027, generating gains of roughly 688% compared to Monday's closing price.
But Wood believes all this is possible because of her firm belief that Musk is the leader and visionary that can make it all happen.
Given Musk's ability to (eventually) deliver on his goals, and Wood's track record for correctly making the big call, my money's on Tesla.
