October 28, 2020

Tesla will soar another 400% after torrid rally this year, billionaire stakeholder Ron Baron says

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ron Baron
  • Billionaire investor Ron Baron told CNBC on Wednesday that Tesla will become a $2 trillion company. 
  • Baron’s asset management firm bought Tesla in 2016 when shares were roughly $40.
  • He said he’s focused on the business of Tesla and less concerned with the short-term stock movements. 
  • The electric vehicle company is up more than 442% year-to-date. 

Legendary investor Ron Baron told CNBC on Wednesday that Tesla will soar another 400% to reach a $2 trillion valuation.

The Baron Capital founder has been a long-time Tesla bull and said he bought it in 2016 when the shares traded for just $40. The stock has had a volatile ride upward but is now trading around $450 a share, up more than 442% year-to-date. Baron said he’s more focused on the business model of Tesla and not the short-term “yo-yo” movements of the stock.

“What we worry about are not stock prices when we’re an investor in a business, we worry about the businesses,” he said. “The short term I can’t have any clue what’s going to happen. I do think that – it’s now over $400 billion market cap, it was $40 billion when we started. I’ve said for a long time I thought it was going to be 1 to 2 trillion. With the developments that have taken place recently, I think 2 trillion is the right number.”

Baron said he expects the electric vehicle company will build more factories and have between $500 million and $800 million in sales in 10 years on just cars. “The batteries is just another unbelievable business which I’m very excited about,” he added.

Read more: Jeff James has crushed the market this year thanks to a stock pick that’s soared 1,155%. He shares another bet he expects to deliver similar returns – and lays out 3 additional opportunities in tech.

“So far in the first four or five years that we’ve owned it, the stock went up and down like a yo-yo, and that would be expected,” Baron said. “Because what they were doing they were building facilities, hiring people, coming up with design. It’s a reasonable thing to bet against them.”

But Baron Capital is betting big on Tesla. The firm with over $39 billion in assets under management has multiple growth funds loaded with the stock. Tesla is the top holding in the Baron Partners Fund, representing about 29% of its total investments. That fund was the leader among general domestic stock funds in the third quarter, according to The New York Times. The second-best performing fund was the Baron Focused Growth Fund. Tesla is also the top holding in that fund.