Why Cathie Wood Believes Tesla Will Hit $2,600

And why I'm getting long ahead of earnings

• Cathie Wood’s ARK Invest maintains a bold $2,600 price target for Tesla by 2029, rooted in the disruptive potential of its autonomous ride-hailing business.
• Tesla's Q1 2025 deliveries fell short of expectations, with 336,681 vehicles delivered, marking a 13% year-over-year decline.
• Wood’s forecast hinges on Tesla’s AI lead, development of full self-driving (FSD), and vertical integration in energy, vehicles and autonomy.
• I’m getting long delta via the $270/$275 ATM call spread, positioning for a move higher into or after earnings.
• This setup offers limited risk, directional exposure and aligns with historical earnings season behavior for Tesla.

Cathie Wood’s $2,600 Tesla Target: Betting on the Robotaxi Future

Cathie Wood’s ARK Invest released its updated Tesla (TSLA) valuation model last year, reaffirming its $2,600 base-case price target for 2029. It’s an aggressive number, especially when compared to the current market price of around $270, but the underlying thesis is clear: Tesla isn’t just a car company—it’s a data, AI and autonomy powerhouse.

A company report called ARK Invest Big Ideas 2024 put it this way: “We think that Tesla's prospective robo taxi business line is a key driver, contributing 60% of expected value and more than half of expected EBITDA in 2029. Across our simulation set, electric vehicles account for 33% of revenues in 2029, at substantially lower margins than robo taxi revenue."

ARK estimates that by 2029 Tesla could have millions of autonomous vehicles in service, generating high-margin revenue by offering ride-hailing services through a robotaxi network. These vehicles wouldn’t just replace Uber drivers—they’d do it cheaper, safer and at far greater scale.

A few key assumptions drive ARK’s model, like Tesla’s lead in autonomy. The company has logged over 300 million miles of real-world data with full self-driving (FSD) mode, giving it a valuable dataset to train its AI. With the recent rollout of FSD v12, the system now leverages end-to-end neural networks that learn driving behavior more like a human than a programmed machine.

In robotaxi mode, Tesla’s high-margin business model could generate $0.25 per mile in revenue. With vehicles driving tens of thousands of miles per year, the numbers scale rapidly. ARK believes each robotaxi could generate $100,000+ annually in revenue with minimal overhead.

Tesla’s also has AI and energy synergies. Its Dojo supercomputer, energy division,and AI chip stack are expected to support not just autonomy but potentially third-party licensing deals. While speculative, this upside is part of ARK’s bull case.

Notably, Wood reaffirmed her view even after Tesla’s weak delivery numbers this quarter, stating in an interview with CNBC that “Tesla is the biggest AI play in the market—bar none.”

Why I’m bullish ahead of earnings

Tesla is down over 30% year-to-date as of early April 2025, trading near its lowest levels since mid-2023. Bears point to sluggish EV sales in China, shrinking margins and lackluster delivery numbers. But this sell-off has also reset expectations.

The company reported Q1 2025 deliveries of 336,681 vehicles, a 13% decline compared to the same period last year and short of analysts' expectations of around 372,410 vehicles. This shortfall is partly attributed to production challenges during the Model Y changeover, which led to several weeks of lost production. However, broader issues, including increased competition and backlash against CEO Elon Musk's political activities, have also affected sales.

In the past, Tesla has shown a tendency to rally into and after earnings—especially when expectations are low. The upcoming April 22 report will likely focus on margin recovery, energy storage growth and updates on FSD subscriptions.

Trade setup

Buy the $270 call/sell the $275 call, expiring shortly after earnings. The exact date depends on implied move and pricing. This is a defined-risk bullish spread, ideal when volatility is elevated but directional conviction is high. If Tesla closes above $275 by expiration, the spread pays out $5 minus the premium paid (usually between $1.50 and $2.00, depending on IV). If the stock stagnates or dips slightly, max loss is the premium paid.

I chose this spread because it keeps risk manageable while giving me long delta exposure into a potentially catalytic event. If Tesla surprises to the upside—even by stabilizing margins or showing FSD adoption growth—it could easily retest $290–$300 in the short term.

Tesla remains one of the most misunderstood and volatile names in the market. But that’s what creates opportunity. While the near-term concerns are valid—especially around EV pricing and global competition—the long-term story is very much alive.

Cathie Wood’s $2,600 target isn’t just a moonshot—it’s built on a multi-layered view of Tesla as an AI-driven, autonomous platform company.

Whether or not you agree with that valuation, the upcoming earnings offer a compelling short-term setup, especially with the stock trading near multi-month lows.

Errol Coleman appears on the tastylive network shows Today’s Assignment and Trades on the Go.