Analysts’ affinity for Tesla continues growing and that’s a boon for the ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ), an ETF with one of the largest weights to the electric vehicle maker.
Morgan Stanley, though mostly tepid on Tesla, seems at least one bright spot for the company. The bank believes that by 2025, Tesla will be far more profitable than ride-hailing firm Uber (NYSE: UBER).
Morgan Stanley “projects Tesla’s EBITDA will rise to $12.5 billion in 2025, up from $3 billion in 2019, while Uber’s will jump to $6.4 billion from a loss of $2.7 billion last year. Morgan Stanley did not give predictions for either company’s 2025 EBITDA margin,” reports Mark Matousek for Business Insider.
The actively managed ARKQ allocates 12.50% of its weight to Tesla, according to issuer data. That’s enough to power the fund to a 25.42% year-to-date gain.
Tesla Loving the Limelight
ARKQ seeks long-term growth of capital. The fund is an actively-managed fund that will invest under normal circumstances primarily in domestic and foreign equity securities of autonomous technology and robotics companies that are relevant to the fund’s investment theme of disruptive innovation. Most of the fund’s assets will be invested in equity securities, including common stocks, partnership interests, business trust shares, and other equity investments or ownership interests in business enterprises.
“Based on each company’s stock price, investors appear to be much more optimistic about Tesla’s future than Uber’s (Tesla shared opened at $1,000 on Tuesday, while Uber opened at $33). But Morgan Stanley, whose price target for Tesla is $650, cautioned that investors’ expectations for Tesla may be too high,” according to Business Insider.
Currently, electric vehicles represent a small percentage of new automobiles sold around the world and cars on the road, but that percentage is expected to increase in a big way over the next several years, but massive growth is coming for the industry. Increasing battery life and power is essential to converting more drivers to electric vehicles.
Tesla catches investors’ attention, but the good news is there’s much more to the ARKQ story, The ARK fund captures the converging industrial and technology sectors, capitalizing from autonomous vehicles, robotics, 3D printing, and energy storage technologies. The ARK Web x.0 ETF targets next-gen internet innovations like artificial intelligence, cloud computing, cryptocurrencies, and blockchain technology.
For more on disruptive technologies, visit our Disruptive Technology Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.