Shares of Tesla have tanked this week following a downbeat earnings outlook, but fund manager David Baron remains bullish on Elon Musk's carmaker, as well as his rocket-producer SpaceX.
He forecasts Tesla stock to gain about 550% to hit $1,200 a share by 2030, and for SpaceX to triple in valuation over the same period, according to a recent interview conducted by Bloomberg.
Baron runs the Baron Focused Growth Fund, which counted Tesla and SpaceX as its largest holdings as of December 31, 2023. The fund climbed 28% in 2023, outperforming the S&P 500's gain of 24%.
Baron told Bloomberg that the growth outlook for Musk's companies remains strong, even if it has moderated from previous calls.
"While he may not be growing 50% a year as the company thought, this year in a tough environment he's still growing volume by 15% to 20% per year and making us $7,000 per car of gross profit," Baron said.
His comments come on the heels of a rough week for Tesla, which reported revenue and profit that lagged estimates, and warned of a production slowdown in 2024. The stock tumbled 12% on Thursday following the results and a tumultuous earnings call one analyst called a "train wreck."
"This was the most sobering outlook I have seen from Tesla," Gene Munster, the managing partner at Deepwater, said in an interviewwithCNBCWednesday.
Meanwhile, Baron expects SpaceX's valuation to increase by 20% this year. Longer term, he sees it doubling within three years and tripling by 2030. Bloomberg previously reported the company is worth more than $175 billion.
The Tesla allocation in Baron's fund is critical for his ambition to boost his total assets to $2 billion, up from current levels of about $1.3 billion.
One reason Baron is so bullish on Musk is that the world's richest person still holds a significant stake in his companies. Baron says he looks for such ownership levels when deciding where to invest.
"[Musk's] interests are aligned with ours," Baron maintained. "He's not going to do anything stupid to change the trajectory of the companies."
Tesla stock will gain 550% and SpaceX's valuation will triple by 2030 under Elon Musk's leadership, top investor says. Fund manager David Baron broke down his highly bullish views on Elon Musk-led Tesla and SpaceX. He told Bloomberg Tesla can soar 550% and SpaceX can triple in valuation by 2030.
Meanwhile, even as Tesla might not be able to sell 20 million cars annually by 2030, its long-term forecast looks bullish. Ron Baron expects the stock to hit $1,500 by 2030, while Cathie Wood - who's arguably the biggest Tesla bull - has set a base case 2027 target price of $2,000 on Tesla.
Around 75% of Musk's wealth was derived from Tesla stock in November 2020, a proportion that fell to about 37% as of December 2022, after selling nearly $40 billion in company shares since late 2021.
How many shares of Tesla does Elon Musk own? According to Tesla's 2022 Annual Report, Tesla's CEO and founder, Elon Musk, owns 715.022 million shares, accounting for 20.6% of the 3.169 billion outstanding shares as of the end of March 2023, unchanged from the end of December 2022.
They believe an upside scenario for the stock over the next 12 to 24 months could be ~$300 using a multiple of 50x to 60x applied to the company's 2026E EPS, while a downside scenario could be ~$65 to $85 using a multiple of 30x applied to Tesla's 2024 EPS.
How Much Has Tesla Grown in the Past 10 Years? As of March 28, 2024, the price of Tesla's stock was $175.79. Ten years ago, at market close on March 28, 2014, Tesla's stock was trading at $14.16 per share. This means that $10,000 invested in Tesla in March 2014 would be worth about $124,145 today.
The average price target for Tesla is $173.29. This is based on 32 Wall Streets Analysts 12-month price targets, issued in the past 3 months. The highest analyst price target is $310.00 ,the lowest forecast is $22.86. The average price target represents -6.44% Decrease from the current price of $185.21.
Bernard Arnault, chairman of LVMH, is the richest person and the richest man in the world with a net worth of $215 billion. After Arnault is Jeff Bezos, founder of Amazon. Other billionaires with some of the largest net worths include Tesla's Musk, Microsoft's Bill Gates, and Oracle's Larry Ellison.
Tesla stock is down 30% through May 8, 2024 due to lower shipments, high vehicle prices, lack of new products, and fresh legal problems related to its self-driving software.
Zuckerberg owns about 13% of Meta, while Musk controls — for now — 20.5% of Tesla stock. Musk also leads several other business ventures, including SpaceX and Neuralink. Tesla stock has fallen about 39% so far in 2024, making Tesla one of the worst performers in the S&P 500.
CEO Elon Musk is by far the largest shareholder, with over 20% of the company's equity. Besides Musk, the largest shareholders are asset management companies like BlackRock, Vanguard, and State Street.
Ark's prediction that Tesla stock will jump to $2,000 by 2027 hinges on the company generating $1 trillion in annual revenue by then. In other words, the company's revenue will have to grow more than tenfold from here, or by 80.2% compounded annually.
This means that your $1,000 10 years ago — technically, $1,002 — would have bought 60 shares of Tesla. As of Mar. 3, 2024, those 60 shares of Tesla would be worth $12,158.40. That marks a 28.342% annual rate of return.
It's unlikely Tesla's returns going forward will come anywhere near resembling the last five years. So, investors shouldn't expect a $1,000 price per share by the end of the decade.
According to the latest long-term forecast, Tesla price will hit $200 by the end of 2025 and then $250 by the end of 2027. Tesla will rise to $300 within the year of 2029, $350 in 2030, $400 in 2033 and $450 in 2035.
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