CNBC TV
Summary List Placement- 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.
"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.
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