The Prophet and Her Profits

CATHIE WOOD has leveraged her zealous belief in innovation into a $29 billion-in-assets investment firm and a $250 million net worth. Among her predictions: Tesla will build a fleet of robo-taxis worth $1 trillion.

- Antoine Gara

Tesla shares were limping along around $200 in May 2019, about where they had traded five years earlier, when Elon Musk’s biggest Wall Street booster tried a gutsy experiment. Cathie Wood and her Ark Investment Management were already well-known for their way-out-there predictions that Tesla would build a fleet of robotaxis worth $1 trillion and that its shares would soar 20- or 30-fold by 2023. Now she stirred the pot again by publishing online Ark’s new bull’scase valuation of $1.4 trillion, implying a share price above $6,000, complete with every Excel calculation and assumption behind those estimates.

Criticism came fast and furious. Tesla short seller Jim Chanos, famed for uncovering Enron’s fraud, took Wood to task over Ark’s forecasts of Tesla’s gross margins. “[W]hat Ark has produced is a forward pricing for Tesla, not a valuation,’’ sniffed valuation expert Aswath Damodaran, a finance professor at New York University. The model, he noted, didn’t include a discounted cash-flow analysis and carried incomplete forecasts on the costs Tesla would incur to scale its vehicle production. That $1 trillion value Ark was placing on Tesla’s nonexistent robo-taxi fleet? “Strikes me as more fairy tale than valuation,’’ Damodaran opined.