One of the most outspoken Tesla Inc TSLA bulls and investors laid out a price target for shares of the electric vehicle leader at the start of November. The investor echoed those comments again this week during an interview.
Here’s what went into the price target and how much the stock could be worth in seven years if the target is reached.
What Happened: An investor in Tesla since 2014, Ron Baron has been one of the most outspoken Tesla bulls and believe shares will continue to appreciate in the years to come. Baron issued a price target that could share similarities with a famous bull case from Ark Invest CEO Cathie Wood.
Baron said in late 2022 that he believes Tesla can hit $500 to $600 per share by the year 2025 and that the company could be worth $4.5 trillion in the next eight to 10 years, making it worth more than Apple and Saudi Aramco combined — a claim that Musk made in 2022.
“But that’s not including robots, that’s not including autonomous vehicles, that’s not including batteries,” Baron said at the time.
The price target came from estimating Tesla to sell around 20 million cars annually in the future, compared to around one million sold in 2022.
“In 2030, if he does 20 million cars per year, and they’re $50,000 a car, that’s $1 trillion in revenue and he gets operating profits at somewhere around 30%,” Baron said.
Baron echoed his previous comments during an appearance on CNBC Friday.
“We invested $380 million, and we’ve made about $4 billion so far and we’ve cashed in about $1.5 billion,” he said.
Baron said he recalls meeting Tesla CEO Elon Musk in 2010 and not investing until 2014. The investor said it was Musk's assertion that unit growth was going to be 50% annually, along with several visits with the billionaire, that got him ready to invest.
“The stock is now $250. I think it’s going to be $500 in 2025 and I think in 2030, it’s going to be $1,500. That’s my targets,” he said.
Baron and his investors own 17.5 million Tesla shares today, including 5 million that are personally owned by Baron.
Baron said he bought his own stake in Tesla after buying for all his investors. The investor said he will only sell his stake in Tesla after all his clients sell.
“I’ll be the last one to sell. Last in, last out,” he said.
Related Link: Tesla Bull Ron Baron Says Charging Deals Present Really Big Opportunity For EV Giant
Investing $1,000 in Tesla Stock: Investors could benefit along the way if Baron is right about his price predictions.
A $1,000 investment in Tesla stock today could buy 3.90 shares, based on a price of $256.60 at the time of writing.
Hitting a price target of $500 in 2025 would make the investment worth $1,950. This would represent a gain of 95% in two years.
Hitting a price target of $1,500 in 2030 would make the investment worth $5,850. This would represent a gain of 485% in the next seven years.
While all of this is hypothetical, Baron has been one of the big believers in Tesla, and is holding onto his shares and placing another bet for the long haul, which could tempt more investors to join him.
Read Next: Tesla Q1 Earnings Highlights: Revenue Beat, EPS In-Line, Cybertruck Update And More
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