Tesla shares could rise 570% over the next decade to a $4.5 trillion valuation, according to investor Ron Baron. The estimate does not include robots, autonomous vehicles, nor batteries.
Renowned investor Ron Baron of Baron Capital remains bullish on Tesla. He told CNBC on Friday that he expects Tesla to turn in huge gains that will eventually lead to a company valuation of around $4.5 trillion, up 570% from current levels.
Baron is a longtime investor in Tesla, first acquiring a stake in the company in 2014. He has a combined stake in Tesla worth about $4 billion. The investor believes that in 2025, the company's shares will be worth about $500-600 each, and in 8-10 years, the total value of the company will be about $4.5 trillion.
“I think in 2025 it [Tesla stock] will be $500 to $600. And in eight to ten years we ought to be somewhere around $4.5 trillion,” Baron said.
The investor agrees with Elon Musk's comments during the Q3 2022 Earnings Call that Tesla could be bigger than Apple and Saudi Aramco combined, implying a valuation of over $4 trillion.
The calculations behind Baron's bullish target are based on Tesla significantly expanding its business over the next decade, selling about 20 million vehicles a year.
“In 2030, if he [Elon Musk] 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 a 15x multiple on those $300 billion in operating profits get you to $4.5 trillion.
The investor emphasizes that the bullish case outlined solely by the contribution from Tesla vehicles to revenue does not include other impressively profitable areas that the company is working on right now. Areas such as autonomous cars, robots, and batteries definitely offer a margin of safety for his investment.
“But that's not including robots, that's not including autonomous vehicles, that's not including batteries. He [Musk] thinks robots are going to be bigger than cars. So there's so many things happening at Tesla,” it's hard to keep up, Baron explained.
© 2022, Eva Fox | Tesmanian. All rights reserved.
We appreciate your readership! Please share your thoughts in the comment section below.
Legal Disclaimer --
This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Eva Fox, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.
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.