Cathy Wood, founder of Ark Investments, said on Wednesday that ifTeslaNext year, she can reach her 5-year target price of $3,000, then she will not hesitate to clear her position and cash out.
Tesla's stock price is currently around 750 US dollars, and Wood had previously predicted that the stock would reach 3,000 US dollars by 2025. At an investment conference on Wednesday, she said, “If our outlook doesn't change and we can reach $3,000 next year, I'm guessing we'll leave the market quickly.”
Wood attended a panel session at the Morningstar Investment Conference online on Wednesday, where she had a debate with Rob Arnott (Rob Arnott), a senior investor and Chairman of Research Affiliates. Arnold has always been skeptical about highly-valued growth stocks such as Tesla.
Arnold asked Wood how an investment manager should decide when to exit a position.
He said, “What selling principles can protect these gains? What selling principles allow you to spot disruptors when you don't know what they're doing in the market?”
Wood defended his bet on Tesla. In addition to listing some of the advantages of electric cars, including that she hasn't had to go to a gas station since September 2018, she also mentioned the drop in the price of battery pack systems.
She said that due to falling battery prices, she expects the average price of electric cars to fall below the level of fuel vehicles over the next year or so. This trend will continue until 2025, when she expects the average price of an electric car to be 18,000 US dollars, while the price of an ordinary fuel vehicle will be around 25,000 to 26,000 US dollars.
At the press conference after the group meeting, someone repeated Arnold's question, and Wood then said that Tesla will clear its warehouse for $3,000 next year. Of course, this is just a joke.
For Wood, last year was a dramatic year. Her flagship fund, Ark Innovation ETF, outperformed most of its American peers last year, with returns close to 150%. But the fund is down 5% this year.
But Wood continues to insist on her bet on disruptive technology and says she expects a compound annual return of 30% for her flagship strategy. She also said that she doesn't think there is a bubble in the US stock market.