Due to the bleak profit outlook, Tesla's stock price plummeted this week, but billionaire investor David Baron remains optimistic about Elon Musk's automotive manufacturing company and his rocket manufacturing company SpaceX.
In the latest interview, he predicted that Tesla's stock price would rise by about 550% to $1200 per share by 2030, while SpaceX's valuation would double during the same period.
Baron manages The Baron Focused Growth Fund, which listed Tesla and SpaceX as its largest holdings as of December 31, 2023. The fund rose 28% in 2023, surpassing the 24% increase of the S&P 500 index.
Baron stated that Musk's growth prospects remain strong, although there has been a slowdown compared to previous expectations.
"Although it may not have achieved an annual growth rate of 50% as expected, its sales have continued to grow at a rate of 15% to 20% annually in a challenging environment this year, with a gross profit of $7000 per vehicle."
Prior to his statement, Tesla had just had a difficult week as the company's revenue and profits fell behind expectations and warned that production would slow down in 2024. On Thursday, the company's stock price plummeted by 12% after releasing its financial report, which an analyst referred to as a "train crash.".
"This is the most thought-provoking prospect I have seen from Tesla," said Gene Munster, Managing Partner at Deepwater Asset Management.
Finally, Baron also expects SpaceX's valuation to increase by 20% this year. In the long run, he believes that this number will double within three years and double by 2030.