Ark Invest’s underlying logic and news about the latest Tesla (TSLA ) valuation
"We have been paying attention to the fluctuation of stock prices, but our investment period is 5 years. When we experience a callback like this, the fund sector rotates very fast. I am very happy that the bull market is now expanding to other types of stocks. In 2016 At the end of the year, the share price of value stocks took off, and they were far away from growth stocks. Whenever I saw such a signal, I would say: Very good! This shows that the funds of the bull market are spreading to other stocks. This is good news. Over time, we have concentrated on investing in stocks that are particularly promising in our portfolio. This is what we have done during this time. We bought more stocks when the stock market bottomed during the epidemic. Now we have about 55 stocks in our ETF. We started to buy. Some single-business company stocks (Pure Play Names), buy some companies that are actively involved in innovation, but are not single-business companies like Regeneron or Novartis, to ensure that there is enough cash to buy more promising companies in this situation."
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The investment period of Ark Invest is 3-5 years, so most of the goals mentioned by other analysts of Cathie Wood or Ark Invest are mostly the results after 3-5 years. Another point that everyone should pay attention to is the ETF of Ark Invest. I have set a rule that individual stocks cannot exceed 10% of the total. So even if you see that Ark Invest sold Tesla one day, it may be due to the adjustment of the ETF position.
And Cathie Wood also mentioned her views on the current market trend. She believes that the bull market is not over. The bull market is just spreading from the technology stocks of the previous year to value stocks. This is a good thing for the entire market.
I feel that this time the market is killing the valuation of growth stocks because of the impact of the epidemic, water release, and interest rates. Last year, people’s expectations for technology growth stocks were getting higher and higher, and these stocks were sought after by funds. The stock price is also rising steadily.
This year, when the 7-year U.S. Treasury bonds were auctioned on February 25th, no one bought them, which led to the withdrawal of a large number of funds from the bond market, which increased the yield of the Treasury bonds. The valuation of growth stocks that have been overvalued has fallen sharply.
The difference between this decline and the Internet bubble in 2000
Everyone remembers to pay more attention to the fluctuations in the bond market in the next few days, but this correction is fundamentally different from the Internet bubble in 2000.
During the Internet bubble, as long as this company advertised itself as an Internet company, there would be a large number of financial institutions vying to help you do an IPO listing, but the problem is that many of these so-called Internet companies simply cannot even launch normal products. IPO money to grab market share.
Now it seems that there are a bunch of similar shell companies scamming under the name of Internet companies. But the technology growth stocks of the two years have launched good products on the market and these companies are not focused on one industry. They are scattered. In various industries.
So I think this decline is not like the Internet bubble at the beginning, but the market has killed a wave of growth stock valuations, and some funds are transferred to value stocks. The whole bull market will go healthier. In summary, it is short-term negative, long-term positive.
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| Tesla stock target EPS |
Tesla stock price forecast 2021-2025
There are two things to pay attention to in the Tesla valuation model. The first point is that Tesla has increased its market share. The valuation given at that time was $4,000 per share, which is now $800.
Tesla's market share in the global electric vehicle market
At that time, it was believed that Tesla’s global electric vehicle market share would drop from 17% to 11%, but now it’s the opposite. Even if it competes with other well-known traditional car manufacturers and Tesla, Tesla’s market share is still increasing. Amazingly, a large number of electric vehicles have been delivered! And Tesla accounted for 80% of the U.S. electric vehicle market in the third quarter of 2020.
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| Tesla's Region |
Tesla is likely to achieve true autonomous driving
The second point is that self-driving Tesla is very likely to achieve true self-driving. It is believed that the probability will be higher than the 30% in the previous Base case. Interestingly, the gross profit margin of the self-driving part is around 80%. According to the future Five-year forecast data, the gross profit margin of selling cars is only 25-30%. If Tesla achieves autonomous driving, the valuation will change drastically. I believe Tesla can achieve it.
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| Tesla's Revenue |
Ark Invest's Tesla valuation model and target price
When Ark Invest announced Tesla’s valuation model before, they assumed that Tesla’s share of the global electric vehicle market would drop from 17% to 11%. Based on this assumption, Ark Invest could already give $4,000 per share It is predicted that as of October 2020, Tesla’s global electric vehicle market share is 18%.
Although traditional car manufacturers have recently begun to enter the electric car market and the European market share reported by the media has fallen, I don’t think we can just judge the number of deliveries in one or two months.
January and February were the off-season, and Tesla now has 80% of the electric car market in the United States. The market share in China is also increasing year by year, reaching 21% in 2020. After the completion of the Berlin super factory, Tesla is in The European market share will also be further improved. Therefore, in this context, Ark Invest's newly announced Tesla valuation in two weeks may once again exceed people's imagination, and Cathie Wood's direction for Tesla's fully autonomous driving Also very recognized.
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| Tesla's Asset |
Ark Invest focuses on investing in innovative companies
Ark Invest focuses on investing in innovative companies. This strategy will be very effective. The focus is on companies with 14 technologies out of 5 platforms.
These companies will have exponential growth. In addition to this, these technologies can cooperate. Just like the autonomous driving taxi service contains three different innovative technologies like robotics, the autonomous car is just a robot and these cars will It will be electric because of the lowest cost and the assistance of artificial intelligence. When these three technologies are combined, I believe there will be unimaginable growth potential.
Many research institutions are aware of this and will focus on the analysis of innovation. Part of the idea is very closed. ARK concentrated research is the platform Ark Invest focuses on 14 innovative technologies related to the 5 major platforms. These innovative technologies will generate a lot of power. Those traditional Of analysts will be taken aback.
Cathie Wood’s investment style has always been unique and has its own set of theories. She is optimistic about companies with disruptive innovation possibilities. One thing she said, I think it’s very good.
Traditional analysts mainly focus on one industry, so they always use the traditional thinking models and indicators in the industry to analyze those innovative companies, while the analysts of Ark Invest focus on the platforms associated with the 14 innovative technologies. Starting from these 14 technological directions to find the most promising companies in related fields is completely different in the underlying logic.
It doesn’t matter whether you buy Cathie Wood’s ETF or not, but I think Cathie Wood’s stock selection logic and strategy are very worthwhile for us to learn from.
Cathie Wood also mentioned before: "I never thought that I would just sit with our analysts and discuss how the world will develop every day. We are very eager to share this with everyone from the perspective of teaching. We want everyone to understand that the world is changing at a rapid rate and why these are so important. I don’t just mean that investment portfolios are like parents educating children, guiding them in the right direction because the world will undergo fundamental changes when we are in Experience the plate rotation like the current one."
I think it’s a good thing that the bull market is expanding, but you must be careful with the current value stocks to make sure you know whether this stock is ready to innovate or will be destroyed. Although we also agree that energy and financial stocks will be the best performers this year. The two types of stocks rose by about 37% or 15% respectively, which should be about the same.
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| Tesla's CFO |
Value stocks VS growth stocks
Cathie Wood believes that these two industries will be the easiest to withstand challenges. Like now known electric cars, self-driving cars, and e-wallets, Cathie Wood said this is important because we are indeed at a point in time that is changing rapidly.
Like the previous industrial revolution, machines replaced manpower and the rise of the Internet in recent years. At every key turning point in human society, it is always because of the emergence of a technology or development direction that human life has been completely changed. But we are now. At the same time, many innovative technologies may change the way of human life.
Electric cars, e-wallets, and genetic technology mentioned by Cathie Wood are all technologies that may completely change mankind. The potential benefits of investing in these disruptive innovation fields will be unimaginable by anyone. Now funds are starting to transfer to value stocks.
But everyone must also remember to see if the value stocks you hold can quickly integrate into this big trend. You can imagine if the value stocks you invest in now are the incredible Nokia before Apple released the iPhone, what will be the consequences. I don't need to say more.
Maybe you don’t agree with the underlying logic of Cathie Wood, but knowing it will also be a direction for thinking. When selecting stocks, we can think more and evaluate whether the stock we want to invest in can continue to innovate to keep up with the industry. And I agree with Cathie Wood’s thinking direction.
I think the reason why innovative technology stocks will become the new "value stocks" in the next 10 years.
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