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Tesla Motors Could Provide 30-50 Times Return in 15 Years: Ron Barron
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In
June, Baron Capital Founder, Ron Baron, said on CNBC's Squawk Box that
Tesla Motors Inc. (NASDAQ:TSLA) could be one of the world's largest
companies, as it is way ahead of its competition.
US Edition
November 5, 2016
Baron Capital's founder provides another confidence boost to Tesla's shares after reaffirming his bullish stance
Published By:
Eunice Gettys
on November 4, 2016 02:11 pm EST
In June, Baron Capital Founder, Ron Baron, said on CNBC’s Squawk Box that Tesla Motors Inc. (NASDAQ:TSLA) could be one of the world’s largest companies,
as it is way ahead of its competition. During the month of June, Tesla’
shares surged 5.45% and closed the trading session at $232. However,
things have changed since then, as the stock has declined over 19% on
the back of SolarCity merger and accidents related to the autopilot
feature of its electric vehicles (EV).During the annual Baron Investment Conference in NYC, Mr. Baron claimed that Tesla is probably “the most interesting” company he has ever invested in in his entire career of 46 years. He has holdings of 1.5 million Tesla shares worth $284 million, representing 1.5% of the assets of his investment management firm.
When Baron Capital invested in TSLA stock, it was priced at $33, which at present is available at an average cost of “over $200 now.” Though it is “risky,” he added. He explained that initially Elon Musk & Co had to prove that EVs are better than gas guzzlers, then they had to prove that they can build such vehicles, and now they have to show that they can build them profitably.
Mr. Baron believes no one wants Tesla to succeed except for those who purchase their products. For example, he said that car dealers want Tesla to fail because its vehicles do not require service and the unions want it to fail because it is “remaking the way you make cars.”
While most of the analysts at the Street are dubious about the SolarCity deal, Mr. Baron supports Mr. Musk’s vision and believes that the transaction is a need because eventually all the vehicles around the world will run on electrical energy.
Given the electricity grid is not expanding, alternative energy sources will be required to fulfill increasing demand for electricity in the future, he said. Therefore, Tesla requires buying SolarCIty to provide sufficient energy for its vehicles, which it couldn’t otherwise.
Mr. Baron added: “The reason you're buying it is you are reinventing the electric grid. That's a bigger opportunity than cars.”
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