Tesla (NYSE: TSLA) is among the most polarizing stocks of all time. Analysts are also quite divided on the company’s valuation. Noted Tesla bull Ron Baron has now said that the stock could rise as high as $1,500 by 2030.
Currently, TSLA stock is trading at around $200. The stock has almost doubled from the multi-month lows that it hit on the first trading day of 2023. Notably, 2022 was the worst ever year for TSLA and the stock lost 65%. It rebounded though in January and had the best month since 2013.
Speaking with CNBC, Baron said, “We started investing in his company in 2014, and they were doing 31,000 cars a year … he thinks 20 million cars by 2030. I’m thinking $1,500 a share by 2030.”
Tesla delivered 1.31 million cars in 2022, a YoY rise of 40%. The delivery growth was below what the company was initially targeting.
The Elon Musk-run company said that it expects to produce 1.8 million cars in 2023. While it would imply a growth of only about 31%, Musk said that the company could produce as many as 2 million cars in 2023.
Musk has reiterated that over the long term, the company’s deliveries would rise by a CAGR of 50%. He has emphasized that in some years, as in 2022, the delivery growth would trail 50%, but would be offset by other years where delivery growth surpasses 50%
Ron Baron Sees Tesla Stock Rising Much Higher
Tesla bulls like Baron see Tesla stock rising way higher than the current price levels. Cathie Wood of ARK Invest who bought the dip in Tesla stock also sees a massive rally in TSLA stock.
However, the $1,500 target price that Baron has assigned easily surpasses other bulls. Baron’s target price would imply a 7.5x rise in Tesla stock by 2030 and a market cap of nearly $4.5 trillion.
Apple, the world’s largest company, could barely surpass the $3 trillion market cap in 2022 and has since failed to reach that milestone again. Its market cap briefly fell below $2 trillion this year amid demand woes.
To be sure, even Musk sees TSLA stock rising to astronomical levels. During the company’s Q3 2022 earnings call, he predicted that the company’s market cap could surpass the combined market cap of Apple and Saudi Aramco. The valuation would be similar to what Baron has predicted.
He reiterated similar views during Q4 2022 earnings call and said, over the long term he is “convinced that Tesla will be the most valuable company on earth.”
Baron also Bough NIO and Xpeng Motors in 2022
Coming back to Baron, he said that Tesla is “the safest car ever built in the world.” Last year, as EV stocks crashed, Baron bought NIO, Lucid Motors, and Xpeng Motors stock. Xpeng Motors fell over 80% last year and was among the worst-performing EV names.
While EV sales continue to rise, there are fears that there could be a price war in the industry.
Last month, Ford lowered Mach-E prices between $600-$5,900 and the average price cut comes to around $4,500.
In the release, Ford said, “With its new EV supply chain coming online, Ford is significantly increasing production of the Mustang Mach-E this year to help reduce customer wait times and to take advantage of streamlined costs to reduce prices across the board, making Mustang Mach-E even more accessible to customers and keeping it competitive in the marketplace.”
Xpeng too lowered prices in China following Tesla’s price cuts. The Chinese EV company has entered Europe, following rival NIO’s footsteps.
Meanwhile, not everybody shares Baron’s optimism for Tesla. Ashwath Damodaran, also known as the “dean of valuation” recently valued the EV company at $130 per share.
He believes that the company cannot continue to grow at exponential rates forever, as its revenue growth would fall to low single digits in the next decade.
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