Billionaire Ron Baron has issued an ambitious price target for Tesla (TSLA).
The noted investor believes it can reach $500 per share by 2025.
However, Wall Street analysts aren’t so optimistic about the company’s growth prospects.
One of Tesla’s (NASDAQ:TSLA) most notorious bulls has issued a bold prediction for TSLA stock. Ron Baron, a noted wealth manager with a net worth in the billions, has been behind the electric vehicle (EV) producer for years. Since 2014, he has held TSLA stock, allegedly making $4 billion off an initial $380 million investment.
Recently, the chairman and CEO of Baron Capital told the hosts of “Squawk Box” on CNBC that he is as bullish on the company as ever. In fact, he set a highly ambitious price target, predicting that TSLA stock will reach $500 per share in 2025. Given its current price of less than $260, that implies an upside of 89%.
Baron has certainly been correct when it comes to Tesla’s price action in the past. But even after the company’s growth this year, such a target seems overly high. Let’s take a closer look at why the billionaire’s prediction isn’t likely to hold up.
The Future of TSLA Stock
Barron’s take on Tesla hasn’t helped boost shares today. TSLA stock is down over 3% today. Its current trajectory indicates that the EV leader will close out the week in the red. Despite some growth earlier in the week, TSLA has been highly volatile over the past five days and has barely stayed in the green.
That’s partially due to some bad news the company has received. Over the past few days, multiple Wall Street analysts have slashed their Tesla price targets. This includes Adam Jonas of Morgan Stanley, who has long maintained a bullish stance on TSLA stock.
The analyst downgraded the company from an “overweight” to “equal weight” rating, citing potential problems with investors betting on Tesla due strictly to artificial intelligence (AI) momentum. In his words:
“Following Nvidia’s blowout quarter, AI exposed stocks have outperformed broadly and investors are constructing portfolios with exposure to the theme. While we understand why Tesla gets a serious mention in an AI conversation, we believe a re-rating on this theme is in the realm of the non-disprovable bull case. Autonomous driving and generative AI still remain, in our view, two very different technological disciplines. While the market may want to dream on the AI theme, we’d prepare to wake up to the sound of a blaring car horn.”
Jonas isn’t the only expert who is less bullish on Tesla’s growth prospects. Daniel Levy of Barclays issued a similar take, noting that the AI effect may be overhyped for companies like Tesla. “We believe it is prudent to move to the sidelines,” he stated. Levy also mentioned the uncertain benefits that stem from Tesla’s supercharger deal with Ford (NYSE:F) and General Motors (NYSE:GM).
Baron alluded to that as a potential area of growth for Tesla. But Levy’s argument makes more sense, as it’s clear that the two rival automakers stand to benefit more from access to Tesla’s vast charging network. All it will do is give consumers incentive to purchase the less expensive EVs offered by Ford and General Motors. That could hurt Tesla’s sales and make it harder for shares to rally. At the end of the day, charging stations aren’t enough to take TSLA stock to $500 per share, or even close to it.
