It’s becoming more apparent that a large weight to Tesla is efficacious for ETFs and the ARK Autonomous Technology & Robotics ETF (ARKQ ) is one of the leaders on that front with a 12.62% weight to the high-flying electric vehicle maker’s stock.
Tesla closed just over $1,000 on Thursday and even with the stock up a staggering 140% year-to-date, some analysts believe there’s more upside to come. That should benefit ARKQ, a high flier in its own right with a 2020 gain of 24.31%. On Thursday, Jefferies lifted its price target on Tesla to $1,200, nearly doubling it from $650.
“Against expectations even a few months back, the gap with peers is widening, from product to battery tech/capacity,” analyst Philippe Houchois said.
ARKQ captures the converging industrial and technology sectors, capitalizing from autonomous vehicles, robotics, 3D printing, and energy storage technologies. That wide mandate helps lever the ARK fund too much more than just self-driving cars, an important trait at a time of rapid robotics advancements.
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.
However, Tesla is dramatically altering the global automobile landscape, proving electric vehicles are here to stay.
“Near term, EV friendly incentives in the EU and lower-priced Model 3 support H2 volume, making Tesla more resilient than peers,” said Houchois.
Adding to the Tesla case, the company said earlier this week the battery range on the popular Model 3 S is now 402 miles. Increased range is crucial in driving higher adoption of electric vehicles because simply put, fears of running out of charge have kept some buyers out of the market. Houchois is enthusiastic about Tesla’s earnings prospects for 2021 and the following year.
“Houchois lowered his 2020 EPS estimate to $1.23 from $2.31, but raised his 2021 estimate by 3 cents to $7.73 and took his 2022 estimate up to $17.48 from $16.43,” according to CNBC.