For Immediate Release
Chicago, IL – November 14, 2023 – Today, Zacks Investment Ideas feature highlights Tesla (
TSLA Quick Quote TSLA - Free Report) , Ferrari ( RACE Quick Quote RACE - Free Report) , Ford ( F Quick Quote F - Free Report) , Alphabet's ( GOOGL Quick Quote GOOGL - Free Report) and Mobileye ( MBLY Quick Quote MBLY - Free Report) . Tesla: Breaking Down Ron Baron's Bull Thesis Who Is Ron Baron?
Ron Baron is a legendary American Investor and founder of Baron Capital Group, a prominent investment management firm. Born in 1943, Baron is known for his long-term investment approach and has achieved success by identifying and investing in companies with significant growth potential.
Baron Capital manages various mutual funds, focusing on diverse sectors such as technology, healthcare, and consumer discretionary. Wall Street recognizes Baron for his optimistic outlook on the stock market and his unique ability to have conviction in his long-term ideas. In other words, Baron tends to both be right and sit tight.
Among Baron's most recent investment triumphs is his oversized
Tesla investment. Perhaps no one else outside of Elon Musk has a better grip on the leading EV-maker than Baron. Baron invested more than a half billion dollars in TSLA between 2014 and 2016 and has held it ever since. Baron Capital's TSLA position has generated more than $5 billion in profits and catapulted the firm to being the only mutual fund to beat the Nasdaq Composite over the past 5, 10, and 15 years. Unsurprisingly, Baron remains as bullish as ever on the stock. Here are 3 reasons why: Low Cost, Mass-Market Vehicle
An integral bear argument against owning Tesla shares is that the company is hyper-focused on only the luxury market. Though the strategy has worked thus far for Tesla and other luxury companies such as
Ferrari, Tesla bears believe that it limits the total addressable market (TAM) for the leading EV-maker and puts a ceiling on growth. However, a recent Reuters report suggests that the days of only focusing on luxury clients are coming to an end.
Reuters reported that Elon Musk plans to build a mass-market vehicle in its new gigafactory that will retail for less than $30,000 USD. Ron Baron believes that the "Model 2" $25k EV will begin selling within a year and a half. A new, mass-market EV would likely drive Tesla's already "hockey stick"-like revenue trajectory even higher.
Juicy Profit Margins Lead to Enormous Profits
In a recent CNBC interview, Baron said,
"Ford (F ) loses $36k per EV produced while Tesla makes between $8-9,000 per car. Tesla plants make about $15 billion per year on a $7 billion investment. An ordinary industrial company would make 15-20% on capital at the most – this guy (Elon) is making back his capital twice a year."
The fact is that no other EV-maker has profit margins that are remotely close to Tesla.
The FSD Leader
The race for self-driving vehicles is well under way and is competitive.
Alphabet's Waymo and Mobileye are among the front runners in the space. However, Baron points out that Tesla collects 100 million miles worth of data a day and has more compute to train its FSD than any other company. Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of
+46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation. See Stocks Free >>
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit
https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.