Many Tesla bulls remain studies in faith

We could go back and forth on what an appropriate valuation for Tesla, but it's difficult to argue that a reasonable estimate (even a bullish one) hasn't moved at least a little south over the past year or so. The finance and cash flow picture has gotten truly ugly. Most indicators suggest sharply slackening demand. The competitive landscape is increasingly daunting, both on the EV and AV front.

Most Tesla bulls have adjusted their estimates as the picture has gotten more grim, but many remain steadfast, perhaps even willing to double down. The following is an informative if extreme example. Not surprisingly, the analyst's faith in the company is explicitly tied to her faith in Elon Musk and his ability to "achieve the impossible."

Ark Invest, whose founder predicted on CNBC last year that Tesla could hit $4,000 per share, stands by that call, even as the stock has lost about 40% of its value in 2019.

Tasha Keeney, an Ark analyst, said in an interview on CNBC’s “Squawk Box” that Wall Street is “misunderstanding the Tesla story” and the potential upside of Elon Musk’s vision. Musk’s accomplishments are widely acknowledged, but he’s gotten himself and Tesla into trouble with the government over his comments, stemming from an August tweet about possibly taking the company private with “funding secured.”

Keeney said Ark believes so strongly in Tesla that its five-year, bear-case scenario is $560 per share, which would be nearly triple the value of where the stock closed Thursday at $195.

This week, Morgan Stanley put a worst-case of $10 per share on Tesla. A day later, Citigroup said the stock could fall to $36 per share.

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Keeney, however, said Ark is not troubled by additional fundraising. “If we talk about cash, and those worries, in our valuation model we actually expect, we have Tesla raising an additional $10 billion to $20 billion in the next five years. And we’re actually OK with that.”

“We want them to get as many cars on the road as possible” with the next step of running a “fully autonomous taxi network.” Last month, Musk promised 1 million vehicles on the road next year that are able to function as “robo-taxis,” a claim that was generally thought to be optimistic, at best.

On an investor call earlier this month, two of the invitees told CNBC that Musk predicted autonomous driving will transform Tesla into a company with a $500 billion stock market value. As of Thursday’s close, Tesla’s market cap was just over $34 billion.

Keeney admits that Musk sets “extremely aggressive goals” and often falls short. “But in doing that, in sort of pushing to that target, they’ve been able to achieve the impossible so far.”