Lee Samaha, The Motley Fool

Sun, Jun 22, 2025, 9:34 AM5 min read

• Ark Invest's price targets on Tesla shouldn't be taken too literally and may prove overly optimistic (again), but they are based on sound arguments.

• Tesla has a history of overpromising and underdelivering on full self-driving.

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Cathie Wood's Ark Invest has been one of the most vocal supporters of and investors in Tesla (NASDAQ: TSLA), and it's no secret in the investing world that Ark has a $2,600 price target on the stock for 2029. Still, what does that target mean, and does Ark's reasoning make sense? Here's the lowdown.

The investment company's price target won't be "right," but then again, it's not supposed to be. It's an expected case scenario produced by a Monte Carlo simulation. In other words, Ark plugged numerous variables into an algorithm and ran a vast number of computer simulations to model a range of randomized outcomes. It's not necessary to get into the weeds about how these simulations are done; suffice it to say that on the bearish side, Ark's model shows a 25% chance that Tesla's stock price will be $2,000 or less in 2029, and on the bullish side, it finds a 25% chance that it will be $3,100 or more. Roughly in the middle lies Ark's expected value of $2,600 for the shares.

The modeling itself is almost certainly wrong, simply because it relies on variables that are incredibly hard to predict.

To illustrate just how challenging it can be to make accurate stock forecasts using this kind of simulation, let's revisit the predictions Ark made in 2021 and 2023 for Tesla's share prices in 2025 and 2026, respectively.

Tesla's current stock price in 2025 is about $320.

Data source: Ark Invest presentations.

Tesla's stock price is currently far below even the bearish scenario Ark simulated in 2021, and it would have to increase by 806% to hit the bear case scenario for 2026 that was projected in 2022.

All of which is not to criticize Ark, because modeling the long-term value of a speculative growth stock like Tesla is incredibly difficult. The point is not to take the targets too literally.

But if investors can't take such price targets as gospel, is there anything to be gleaned from Ark's analysis?