Cathy Wood Stands Firm on Tesla, Exits Apple Amidst Challenges

Cathy Wood, founder of Ark Investment Management, remains bullish on Tesla despite recent challenges, citing potential growth in robotaxis and humanoid robots. She has set a five-year price target of $2,600 for Tesla. In contrast, she has completely exited her position in Apple, citing slowing growth and lack of innovation.

Tesla, Inc. (TSLA) is poised to expand its robotaxi service to the San Francisco Bay Area within the next month or two, pending regulatory approval, according to CEO Elon Musk [1]. This move comes after a limited trial in Austin, Texas, where around a dozen vehicles were deployed under strict conditions. Musk announced on his social media platform X that Tesla will widen its service to cover more of Austin this coming weekend, although the exact details of the expansion remain undisclosed.

The robotaxi rollout is seen as critical for Tesla's long-term strategy, especially as demand for its aging EV models wanes amid increasing competition and backlash over Musk’s political stances. Tesla's market value is significantly tied to Musk’s vision for AI-driven robotaxis and humanoid robots. However, bringing autonomous vehicles to market has proven more challenging than expected due to steep costs, stringent regulations, and investigations. While expansion in Texas encountered little regulatory resistance, launching in California will be more complex, requiring several permits from both the California Department of Motor Vehicles (DMV) and the California Public Utilities Commission (CPUC) to operate a commercial autonomous service [1].

Cathie Wood, founder of Ark Investment Management LLC, remains bullish on Tesla despite recent challenges. She has set a five-year price target of $2,600 for Tesla, citing potential growth in robotaxis and humanoid robots. In contrast, she has completely exited her position in Apple, citing slowing growth and lack of innovation [2]. Wood's support for Tesla underscores her belief in the company's long-term potential, despite the current market volatility.

Tesla has underperformed the Zacks Automotive-Domestic industry year to date, with TSLA shares losing 26.7% compared to the industry’s decline of 23.1% [3]. From a valuation perspective, Tesla appears overvalued, trading at a forward sales multiple of 9.2, higher than its industry’s 2.52 [3]. The Zacks Consensus Estimate for 2025 and 2026 EPS has moved down 3 cents and 5 cents, respectively, in the past seven days [3].

Other players making progress in robotaxi commercialization include Alphabet’s Waymo and Amazon’s Zoox. Waymo is the only company running driverless robotaxis charging fees from passengers, with a fleet exceeding 1,500 vehicles and facilitating more than 250,000 rides each week in major cities [1]. Zoox has opened its first dedicated robotaxi manufacturing facility in California, marking a key step toward launching its commercial self-driving taxi service in the United States [1].

References:
[1] https://www.nasdaq.com/articles/tesla-facing-roadblocks-robotaxis-san-francisco-expansion
[2] https://finance.yahoo.com/news/cathie-woods-tesla-bet-pays-000500606.html
[3] https://theedgemalaysia.com/node/761866