Billionaire investment manager Ron Baron, a prominent Tesla TSLA bull, told MarketWatch Nov. 1 that he sees a path for Tesla's market cap to hit $4 trillion, an increase of more than six times the stock's current value. By 2025, Baron said, Tesla will be trading at $500 per share, more than double where the stock is today.
Baron, who has made roughly $5 billion in profits from Tesla thus far, said that he initially thought Tesla CEO Elon Musk's mission of converting the world to electric vehicles would fail. After several years of research, however, he "became convinced" that Musk would be successful, investing a little less than $400 million in the company in 2014.
Baron's firm has since made "about twenty times our money."
Related: Why Tesla stock is crumbling — and where it could go next
"We invested because I thought there was a big upside," he said. "I thought he was a brilliant guy. I still think that. We continue to work on our research in his company all the time."
This research involves understanding how a given business operates, what is special about that business and whether that unique factor can be replicated by other businesses. When it comes to Tesla, Baron is "convinced that people cannot do what they're doing."
His thesis for the company is that it will be far more than just a car or battery company: "Intel was inside of computers; it's going to be Tesla inside of cars. No one else can possibly compete."
Musk, responding to Baron's $4 trillion projection, said he thinks it's a possibility.
"We do need to knock the ball out of the park several times to achieve that value," he wrote, "but I think we can."
Musk's bullish affirmation mimics a similar one he made in July during Tesla's second-quarter earnings call.
Several weeks previously, Cathie Wood of Ark Invest, convinced of the value of Tesla's autonomous driving technology, projected that Tesla would be trading at $2,000 per share by 2027, an increase of roughly ten times the company's current value. Wood's uber-bullish projection has remained unchanged since April, despite volatility in the stock.
Related: Elon Musk On Tesla's Stock "10X-ing" as Cathie Wood Has Predicted
"I have very high confidence in the long-term value of Tesla, I see it, I really see a path to a 10x, maybe call it a 5x increase in the value of the company," Musk said in July. "Maybe a 10x. Where things go along the way, the trials and tribulations and the mood of the markets, one cannot predict."
Even after Tesla's weak third-quarter earnings which featured another quarter of falling gross margins, Ark Invest's Tasha Keeney explained that the basis of the company's high valuation for 2027 involves the enormous gross margins that will likely be associated with robotaxis.
"Our estimate for our 2027 price target is we think gross margins could be around 50%," Keeney said.
Shares of Tesla closed up 2.4% for the previous session, lifting another 3.5% in pre-market trading.
Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.
