Ron Baron, an experienced investor who made billions of profit from Tesla stock has revealed one significant risk associated with owning it. Despite this, he remains committed to being a long-term holder and plans to keep his shares for at least another decade.
So, what’s the risk, and why does he have so much faith in Tesla’s future? Find out in this article, along with a bullish outlook on Tesla’s stock price prediction from the head of Baron Capital. Could Tesla’s stock price potentially go up nine times its current value by 2030? Let’s find out.
Ron Baron, the head of Baron Capital, has recently shared his bullish outlook on Tesla’s stock price during a CNBC interview in February 2023.
Although Tesla stock price declined more than 70% in the past year, he believes that the long term Tesla’s stock price could potentially go from $170 to $1,500, or about 9 times its current value by 2030.
As a seasoned 79-year-old investor, Baron views the current demand for Tesla’s products to be at historically high levels and expects the company’s stock price to continue to rise in the years to come. Despite the market’s volatility, he remains unperturbed due to the current high level of consumer demand for Tesla’s electric vehicles.
As a result, Tesla’s stock now accounts for 30 percent of his Baron Partners Fund Institutional Shares portfolio, which is the largest holding managed by Baron. Baron said in his recent interview with CNBC that the demand picks up so much, it’s unprecedented demand for Tesla cars right now.
He said, in 2014, he began investing in Tesla when they were producing 31,000 cars annually and had a target of manufacturing 20 million cars by 2030. Therefore, he predicted that the company’s share price could increase by 10 times due to this expected growth.
Let’s take a look at the data if these projected numbers make sense.
When Baron spoke to CNBC, he mentioned that Tesla had produced and delivered 31,000 cars in 2014. In 2018, the number of deliveries increased to about 245,240 cars, and by 2022, it had further grown to over 1,300,000 cars, representing 8-fold and 5-fold growth over a period of 4 years, respectively.
Despite the entry of more electric vehicle producers into the market, Tesla retained its position as the top seller in 2021, generating an annual revenue of $53,823 billion. It further increased its revenue to $81,462 billion in 2022, which represents 70% and 37% growth year over year, respectively.
Source : Tridens Technology
Only if Tesla can sustain its business performance over the next 10 years, achieving 10-fold growth in the company’s share price, as predicted by Baron, may not be far from possible.
Despite Baron’s faith in Tesla, he sold a significant quantity of Tesla shares in 2021. These shares had been acquired at a cost of $42.88 each, totaling more than 1.8 million shares, and generating approximately $6 billion in profit. While this was a profitable move, Baron considers it a painful but necessary measure for risk mitigation.
One Things to Worry The Most About Tesla.
Baron said he doesn’t worry about the company or its competitors, but there is only one big risk he concerns, and it is Elon Musk’s health.
Baron met Elon Musk a decade ago and he thought Musk is a brilliant guy and the electric cars industry may not come this far so quickly without Elon Musk, but the biggest risk he thinks when holding a Tesla share is Elon Musk’ health.
At the age of 51, Musk is known for being a workaholic who sleeps only five hours a day and works for 19 hours. He has not taken a real vacation in about 20 years. Baron can only hope that Musk stays healthy for a long time, as he has ambitious plans ahead.
