Billionaire investor Ron Baron of Baron Capital remains bullish on Tesla, despite the stock falling more than 50% this year. In a recent interview, Baron told CNBC that he expects Tesla to deliver outsized gains, eventually leading them toward a $4.5 Trillion valuation. Tesla’s stock will have to reach a price of $1350 to reach that kind of level. Or rise by more than 570-600%
Baron has been a bull on Tesla ever since his fund started buying Tesla shares back in 2014 and his personal holdings and his company’ add up to a massive $4 Billion holding in Tesla. In addition to that, Baron mentioned that he thinks Tesla stock will be around $500- $600, and in eight to ten years, “it ought to be somewhere around $4.5 Trillion”.
The math behind Baron’s bullish valuation target is solely predicted by Tesla’s ability to scale its business over the next decade. Selling about 20 million cars per year. Tesla is on track to sell just over 1 million vehicles in 2022. “In 2030, if he does 20 million cars per year, and they’re $50,000 a car, that’s $1 Trillion in revenues, and he gets operating profits at somewhere around 30%, “Baron explained, adding that a 15x multiple on those $300 Billion in operating profits get you to $4.5 Trillion,” said Baron.
Baron said this is excluding robots, autonomous vehicles, and batteries. And Elon Musk thinks robots are going to be bigger than cars. He also added, there are so many things going on in Tesla, that it’s hard to keep up.
Even though the company faces a lot of issues from its critics and sometimes from even its owner, Elon Musk, Tesla has been delivering record revenues, record profits, and many more. Tesla stock may be a good buy in the long-term view given the numbers it keeps on giving and the huge advantage it has over its competitors.