On November 16, the S&P 500 announced Tesla's (NASDAQ: TSLA) inclusion in the index on December 21. Baron Capital writes that, if Tesla's growth continues after the S&P 500 rebalances, funds with large Tesla holdings will benefit the most, pointing out that he believes the manufacturer's stock will be worth $2,000 per share in 2030.
Currently, Baron Partners Fund accounts for 39.4% in Tesla of total investments, and Baron Focused Growth Fund in Tesla accounts for 35.9% of net assets.
Source: Baron Capital
Based on an estimate of Tesla's growth, Baron Capital suggests the stock price could reach $2,000 in 2030, 3.3 times the current level. Baron Capital wrote in its FAQs on Baron's Investment in Tesla note:
"Based upon our estimate of Tesla's growth, we believe that Tesla's share price could reach $ 2,000 per share in 2030. That is approximately 3.3X its current level."
In October, speaking to Squawk Box, Baron Funds CEO Ron Baron said that he believes Tesla will become a $2 trillion company. He stressed that Tesla could go from $30-35 billion in sales to $600-700 billion in sales in 10 years. In his opinion, in the coming years, Tesla car sales will grow by 50% annually.
Baron said investors are not considering various factors, such as what happens when Tesla switches to autonomous driving, ride-sharing, a more powerful (and more affordable) battery than others. Also, he stressed that the California manufacturer is working hard to develop a new battery pack.
Another major investment that Baron Capital plans to discuss more and more in the next few years is SpaceX. It has invested about $252.5 million in this private company and hopes that over the next 10-12 years it will be able to earn 30X-50X. The foundation explained in the FAQs:
"Baron has invested about $252.5 million (current value is approximately $346 million) in that private business founded by Tesla CEO Elon Musk and we hope can earn 30X-50X over the next 10 to 12 years on that investment! That's right. 30X-50X !!! Of course, there can be no assurance that our investment in what may already be the largest privately owned business in America will be as successful as Tesla."
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.