Cathie Wood's ARK Sees Tesla Stock at $5K by 2031 and Merger With SpaceX After Musk Unveils Flying Roadster

Cathie Wood's ARK Invest sees Tesla shares reaching $5,000 by 2031 in its bullish scenario, while leaving open the possibility that Elon Musk could merge the electric vehicle maker with SpaceX as the two businesses increasingly converge around artificial intelligence, robotics, and advanced computing.

ARK's updated valuation model puts Tesla's expected share value at approximately $4,400 in 2031, with a bull-case target of $5,000 and a bear-case estimate of $3,300. The forecast follows Tesla's unveiling of its redesigned Roadster, which demonstrated aerial manoeuvres using technology developed with SpaceX, reinforcing the links between Musk's automotive and aerospace businesses.

The potential merger could also reshape the investment case. ARK estimated that a combined Tesla and SpaceX could generate $3.8 trillion in revenue and $2.7 trillion in operating profit by 2031. SpaceX would account for 62% of projected revenue and 69% of operating earnings.

'While our model assesses Tesla as a standalone business, a SpaceX-Tesla merger could take place within the next five years,' the ARK team said in its research.

ARK Bets on Robotaxis and Humanoids to Drive Tesla Stock

ARK's latest forecast represents a major bet on Tesla becoming more than an EV maker. The investment firm expects autonomous ride-hailing services and humanoid robots to account for an increasing share of the company's future value.

Robotaxis are projected to contribute approximately 80% of Tesla's enterprise value in 2031, down from around 90% in ARK's previous model, published in 2024. The reduction reflects the growing expected contribution from Optimus, which is Tesla's humanoid robot programme, including a potential subscription-based robot-as-a-service business.

The model assumes autonomous vehicles could generate recurring revenue through commercial ride-hailing networks, while robots could create additional income through sales and services.

However, the $5,000 target is a scenario rather than a guaranteed outcome. ARK uses a Monte Carlo simulation incorporating 32 independent inputs to model a range of possible outcomes. Its $3,300 bear case represents the 25th percentile of those simulated outcomes, while $5,000 represents the 75th percentile. Both depend on the assumptions underpinning the model.

The forecast hinges on Tesla successfully scaling autonomous driving, expanding its robotaxi network, and commercialising humanoid robots at a scale that has yet to be demonstrated.

Flying Roadster Puts the Tesla-SpaceX Connection in the Spotlight

Tesla's latest Roadster demonstration has brought the relationship between the two companies into sharper focus.

Unveiled on 15th October at SpaceX's rocket test facility in McGregor, Texas, the redesigned electric sports car demonstrated aerial manoeuvres using cold-gas thrusters developed with SpaceX.

Musk said the Roadster could accelerate from zero to 60 miles per hour in less than a second and reach speeds above 230 mph. Meanwhile, Tesla has said production is scheduled to begin in 2028.

The car's revamped technology integration illustrates the engineering overlap between Tesla and SpaceX, but it does not establish that a merger would deliver the financial benefits ARK anticipates.

Note that Musk had said during SpaceX's Q3 earnings call that both companies had formed special committees of independent directors to examine a possible transaction. He expressed support for the idea but cautioned that a merger was not guaranteed.

Shareholder Approval Remains a Major Hurdle

Musk's support does not mean a transaction is imminent. The independent committees must examine the proposal.

Musk said the transaction would require approval from at least 50% of all Tesla shares, rather than just a majority of votes cast. He also said he could not participate in the committees' discussions because of his conflicting interests as a major shareholder of both businesses.

Tesla shareholders could gain exposure to SpaceX's satellite, launch, and AI operations, but they would also need to assess the terms of any transaction and the risks attached to SpaceX's capital-intensive expansion plans.

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