A little over a year ago, when Tesla Inc. CEO Elon Musk publicly flirted with the idea of taking his company private, one investor wrote to ask him to reconsider.

According to research conducted by the investment firm, ARK Invest, “Tesla should be valued somewhere between $700 and $4,000 in five years,” wrote ARK’s chief investment officer, Catherine Wood. “Taking Tesla private today at $420 would undervalue it greatly.”

But anyone who thought that was a bold call hasn’t seen anything yet. On Saturday, ARK published an update to its Tesla TSLA, -4.36% valuation model, saying it now expects the stock to be worth $7,000 by 2024 — and that’s the base case. In a bull case, Tesla shares would trade at, or above, $15,000. The bear case puts the stock at $1,500, or about 2.5 times current trading levels.

What makes ARK so optimistic?

The investment team considers three big variables when analyzing Tesla’s business model: gross margins, capital efficiency and adoption of autonomous driving. ARK is most bullish on Tesla’s ability to cut costs and increase margins, assigning an 80% probability that the company will achieve 40% margins, “consistent with a dominant brand that is an innovation cycle ahead of commoditized competitors.”

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The analysts are least confident about autonomous technology adoption, saying there’s a 70% likelihood that Tesla will fail to create a fully autonomous car.

And as for capital efficiency, or how expensive it is to manufacture cars, the team is split, saying it’s just as likely that Tesla will be able to build factories for $11,000 per unit volume of capacity, as for $16,000. For context, the gas-powered auto industry average now is $14,000.

“The electric vehicle is going to drop below the price of a gas-powered vehicle, like-for-like, within the next 18 months to two years, and then will continue to fall,” Wood said in an interview on Barron’s Market Brief. “So, it’s going to be a no-brainer. Electric cars are going to be cheaper and they’re better cars, they’re better calls.”

Over the next five years, ARK expects sales of electric vehicles to total about one-third of all auto sales, with Tesla’s share at about 18% — unless other manufacturers lag behind. “We’re not as worried about Tesla when it comes to that forecast, we’re more concerned that other auto manufacturers really haven’t even gotten started in this game,” Wood said.

MarketWatch sat down with Wood in December for an extensive discussion about how she and her team, who are active managers of a suite of exchange-traded funds, value innovation. In that conversation, Wood called ARK Invest a “deep value manager,” and in her open letter to Musk in 2018 she called Tesla a “deep value stock today.” ARK doesn’t believe Tesla should be valued as a car company, but as a technology revolutionary bound to upend just about every facet of life as we know it today.

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Wood likens Tesla today to Amazon AMZN, -3.09% two decades ago, noting that the company that’s now considered a category-killer had its doubters, as well.

That goes against much of the way the rest of Wall Street thinks. For starters, most analysts are much more skeptical. The average price target among analysts surveyed by FactSet is for $536, and most researchers only model one year or so into the future.

And that’s just the analyst view. Short sellers — investors who bet that a stock will decline in value — lost nearly $6 billion in January alone as Tesla’s share price rallied, according to an analysis by Ihor Dusaniwsky, managing director of Predictive Analytics at S3 Partners.

Meanwhile, the two ARK Invest funds that are most heavily laden with Tesla shares are the Autonomous Technology & Robotics ETF ARKQ, -3.10% , with a 13.62% weighting, and the Next Generation Internet ETF ARKW, -3.04% , which has 10.80% of its holdings in Tesla. The two funds have returned 15.73% and 27.46%, respectively, over the past 12 months, compared to a 25.98% gain in the Nasdaq COMP, -2.12% .

Tesla shares have more than doubled in that time.

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