Today, Apple Inc. (AAPL) is the largest company in the world. But Tesla Motors Inc (TSLA) stock could rocket so high in the next 10 or 15 years that the currently $33 billion automaker exceeds even Apple’s $540 billion valuation.
That’s according to billionaire investor Ron Baron, CEO of Baron Capital, who went on CNBC this morning to rave about TSLA stock.
Baron said his firm had $300 million invested in TSLA stock, and that he expected to make $6 billion to $7 billion off of that position over the next 10 or 15 years as Tesla becomes one of the biggest companies in the entire world.
Doing some simple math, we see that Baron expects Tesla to be a 20-bagger (and then some), which would yield a market cap of $660 billion in the next 10 or 15 years.
Why does Baron feel this way?
TSLA: Leaving the Competition Behind
Says Baron of TSLA:
“The competition is not anywhere. They could have caught (CEO Elon Musk) four or five years ago. But they can’t catch him now. He’s too far ahead.”
That’s because Tesla has had the foresight to devote billions of dollars to its Gigafactory, which is nearing completion and will be responsible for supplying batteries to the millions of Tesla Model 3s it produces once the company’s first mass-produced, affordable vehicle hits the streets in late 2017.
Baron sees the ability to mass-produce batteries at such a massive scale as an absolute necessity for anyone hoping to compete with TSLA head-on in electric vehicles. The Gigafactory, according to Tesla CEO Elon Musk, will have the largest footprint of any building in the world.
In other words, the Gigafactory will be the largest building by area on the planet earth.
Wall Street is plenty encouraged by Baron’s comments, considering that TSLA stock is up about 5% on Tuesday.
Tesla shareholders can take solace in the fact that Elon Musk, in his own way, agrees with Baron. He thinks Tesla is years ahead of the competition. In a Recode interview last week, Musk said he doesn’t see Alphabet Inc (GOOG, GOOGL) as a direct competitor in the self-driving car space, and thinks that Apple will eventually be a direct competitor, but likely won’t be able to seriously compete with TSLA until 2020.
He even called Apple’s decision to get into the electric car space a “missed opportunity” because he believes it entered the space too late. He clearly did not seem irked by any competition, and joked about how many upstart electric car companies were out there, saying the next thing he knows, his mom’s gonna call him up and announce her entry into the field.
Also, a technical note on today’s rally in TSLA stock: The bounce is coming off the 200-day moving average, which it has been battling for more than a week now. Moreover, it has stopped at its 50-day average — the first time TSLA shares have touched the MA since plunging through it in May. e:
If TSLA shares can hold above the 50-day for a day or two longer, this may be the beginning of an extended technical rally that could see prices head first to the $250 area, and possibly challenging April’s high around $270.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at email@example.com.