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Ark's Cathie Wood Forecasts Soaring Prices for Tesla, Bitcoin

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What You Need to Know

  • Her base case five year target is $3,000 for Tesla and $500,000 for Bitcoin.
  • Wood spoke to New York Times columnist and CNBC co-anchor Andrew Ross Sorkin at the SALT conference.
  • She implied that U.S. regulators will approve a Bitcoin ETF and said she expects courts will be involved.

Cathie Wood, the founder and chief investment officer of Ark Investment Management, expects the price of Tesla’s stock and Bitcoin will soar in the next five years, which is the time horizon she sets for investments in her actively managed ETFs.

Despite recent sales of nearly $139 million worth of Tesla stock held by three of Ark’s ETFs, Wood told New York Times columnist and CNBC co-anchor Andrew Ross Sorkin, a co-anchor at this week’s SALT conference in New York City, that her “base case” for Tesla shares is $3,000 per share and her “best case” is $4,000 five years from now.

Tesla remains a 10% or greater holding in three Ark ETFs — ARK Innovation, ARK Next Generation Internet and ARK Autonomous Technology & Robotics — the same ETFs that recently sold some Tesla shares. Wood termed the sales as “opportunistic.”

Her reasons for the forecast: Tesla is in the best position to solve for autonomous taxis, and the probability of that is rising — she’s forecasting a $10 to $12 trillion autonomous taxi market by 2030, up from the $6 to $7 trillion she had expected previously — and makes the best car on the road today with the best electric battery technology, its own artificial intelligence chip and has the most data to use for training.

On Tesla founder Elon Musk’s pontifications about the stock, Wood said, “Elon is always a year or two too early. We adjust for that in our forecasts.”

She had announced a $4,000 target for Tesla stock in 2018, before the company announced a 5-for-1 stock split effective Aug. 31, 2020. Tesla shares actually hit Wood’s $4,000 target on a split-adjusted basis in January 2021. Shares closed Monday at $743, down 16% from a $883 reach in late January of this year.

Bitcoin Forecast: $500,000

Wood also remains extremely bullish on Bitcoin, which several Ark ETFs have exposure to through holdings in Grayscale Bitcoin Trust; Coinbase, a cryptocurrency exchange platform; Square and Tesla — the latter two own Bitcoin, and Square is building a platform for decentralized financial services.

She is forecasting a more than 10-fold increase in Bitcoin’s price five years from now to over $500,000 as more companies diversify cash holdings in “something like Bitcoin and institutional investors start allocating 5% of holdings toward Bitcoin.”

Asked to choose just one cryptocurrency from all others, Wood chose Bitcoin but noted her confidence in Ether “has gone up dramatically” as a result of an “explosion in developer activity due to DeFi (decentralized finance)” and its transition underway from proof of work, which requires intense computations to validate mining and transactions, to proof of stake, which bases those validations on on the amount of coins an investor holds.

She said she would allocate 60% to Bitcoin and 40% to Ether.

Wood’s Outlook for Cryptocurrency Regulation in the U.S.

Wood said she was surprised by the Wells notice that the Securities and Exchange Commission served on Coinbase for its planned crypto lending platform. “Are you kidding? They haven’t even released a product. … It’s a callout by regulators we’ve got to discuss this stuff. This is happening very quickly.”

She is optimistic that U.S. regulators will eventually allow more crypto products to enter the market. “Our working assumption from the beginning … based on meetings with state, local and federal regulators is that no regulator wanted to be blamed for preventing the next big technology breakthrough to happen in the U.S.”

The Securities and Exchange Commission has yet to approve any Bitcoin ETFs, including an application filed by Wood’s firm. SEC Chairman Gary Gensler “understands crypto and the merits of Bitcoin … but he is a hardcore regulator,” Wood said.

She expects U.S. courts will eventually get involved to pressure regulators to allow for more publicly traded crypto products. “I think we are going to bring courts into the system,” said Wood, who referred to a Canadian court case brought by 3iQ. The digital asset fund manager sued the Ontario Securities Commission to trade a Bitcoin ETF, and won.

Wood didn’t say, and wasn’t asked, whether Ark Invest was planning to file such a lawsuit in the U.S. The ARK Next Generation Internet ETF recently updated its prospectus to include reference to holding cryptocurrencies via “exchange-traded funds domiciled in Canada.”