Tesla Motors Inc (NASDAQ:TSLA) stock jumped on this morning’s market after hedge fund manager Ron Baron said that he loves investing in the stock. The Baron Capital head said on CNBC on Wednesday morning that he thinks Tesla will fly in the coming years. Mr. Baron said that he sees Tesla Motors being valued at up to $120 billion in five year’s time.
Stock in Tesla Motors took off like a rocket on the back of Mr. Baron’s comments. At time of writing shares in the firm were up by more than 3%. Shares reached a high of more than $263 before sinking back down as traders took profits from the surge.
Sending Tesla Motors to $120 billion
Mr. Baron told CNBC this morning that “Tesla is a huge, huge opportunity.” He thinks that the firm is going to rocket upward in the coming years. “We’re going to make between 10 and 20 times our money in the next 10 years” he told the TV audience.
That growth is going to come faster than even optimist Elon Musk will allow for according to Baron “They think, they are going to do half a million cars a year in 2020, and I think they will do it a little bit faster. But the idea is, in 2020, they are doing $5.5 billion this year, by the end of the year they will be doing $10 billion.”
Mr. Baron is known for his long term investing acumen. He has more than $50 billion in his care at Baron Capital, and he’s always looking to find the next Mega-Trend that will hit the stock market and get his investors the best return out there.
EVs are one of those mega-trends according to Baron. He thinks that Tesla Motors is way ahead of the game, and that growth is going to come very fast, “In 2020, they are going to be doing $35-40 billion, making $6 or $7 billion in profits.”
Mr. Baron also told CNBC’s Squawk Box that the real inflation in the economy is being overlooked by the Federal Reserve. He says that a rate rise is overdue.
Tesla Motors looks for growth
Tesla Motors just managed to get a $500 million line of credit from a group of Wall Street banks that will allow it to get the Model X EV SUV made and shipped by the end of the third quarter. Elon Musk estimates that the firm will ship 500,000 EVs by 2020, and those with cash behind Tesla Motors are betting on him getting there.
Most of Wall Street is betting that Mr. Musk can get there, but analysts have been nervous about the firm’s rollout of the Model X. The credit line has subdued some of those worries and as S&P analyst Nishit Madlani said, it give the firm a “liquidity cushion” to protect the Model X from “inefficiencies” in doing just that.
On Tuesday Morgan Stanley auto analyst Adam Jones put a price target of $280 on Tesla Motors. He said that he and his team were “serious EV bulls again” and said that the market is on the verge of a huge comeback based on shared transport. He wrote ““the shared autonomy model of highly utilized mega-fleets completely flip the script.”