Last week, hedge fund Ark Invest, an investor in Tesla, came out with a $3000 price target on the EV maker by 2025 (currently at $620’ish). It was a masterclass/playbook in integrating marketing with data analysis.
The model is on Github (that means there is code & stuff which = fancy)
It used a Monte Carlo simulation with 34 inputs (dang, that’s a lot of inputs)
It incorporated 40,000 simulations (40,000 simulations — holy isht)
It had a bull, bear, and base case (Ark's being complete and exhaustive)
Right now, Tesla is $620’ish. The Ark bear case pegged the price at $1500, the expected value at $3000, and the bull case at $4000.
The forecast assumes that Tesla would be an EV company, an insurance company, and an autonomous ride-hail company. And that it’d be really big in those other businesses where it is a zero today. And that autonomous ride-hailing is a thing by 2025.
No sooner had the model been issued than publications started writing about the price target, resulting in a quick stock bump for Tesla.
Alright, alright. This is where the fans say you should never bet against Elon. I get it. This isn’t a comment on Tesla or Musk.
I do think Ark’s strategy here is actually quite fascinating. If you look for it, you’ll see the strategy it's employing is one that many others are using deftly these days. This is getting long enough so I’ll save the components of that strategy for another day.
If you’d like to read a review of the price target model, this tweetstorm by Chris Bloomstran is a good starting point.