Investor's Corner
Ron Baron discusses Tesla, SpaceX, and a curious move by GM
Renowned mutual fund manager and investment icon Ron Baron of Baron Capital is well-known for his conservative, long-term approach to stock picking over his 46 year career. He’s been compared to Warren Buffett (both for his investing style and outstanding track record) and recently created a bit of a stir when he predicted Tesla stock could hit $1,000 by 2020.
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Elon Musk being interviewed by Ron Baron at the 2015 Baron Capital conference (Image: Baron Funds)
Baron Funds second quarter commentary (via Valuewalk) includes a letter from Ron Baron highlighting some fascinating insights surrounding Tesla. To understand businesses, Baron notes the importance of, “the individuals who lead those businesses; and of the character and talent of the individuals… In the end, we think it’s all about people.” Baron cites an unnamed Tesla executive who told him, “It is amazing to me how little most people know about Tesla.”
Baron explains, “Few institutional investors have met with Elon and JB. Fewer still, we’re guessing, have met with the co-founder’s teaching instructor at Stanford. We believe fewer and fewer in the investment industry are performing even the most basic research on businesses… Our meeting with Dr. Yadigaroglu is one example of Baron Funds’ differentiated primary research approach.”
Above: Tesla co-founders, CEO Elon Musk and CTO JB Straubel, in the early days driving Tesla’s Roadster “P1” (Images: Tesla)
Furthermore, it turns out that, “while at Stanford, Ion was the teaching instructor for JB Straubel, Tesla’s CTO and chief engineer. Ion believes JB and his team are better at battery technology than anyone else. It was lucky for Ion that he met both Elon and JB. Ion invested in Tesla when it was just beginning, and so far has made a lot more than he did in eBay. After meeting Ion, we concluded it was lucky for Elon and JB they met Ion as well.”So who is Dr. Yadigaroglu? Baron elaborates, “As part of our ongoing effort to gain further insight into Tesla’s prospects, we recently met with Dr. Ion Yadigaroglu, a venture capitalist. Ion is an engineer with a doctorate in physics from Stanford. Ion has been programming since he was eight years old! Ion’s dad is a prominent nuclear scientist. So much for Ion’s creds. When Ion studied at Stanford graduate school, his roommate founded eBay. Ion’s $1,300 investment in the eBay startup became worth millions. In 1992, at the dawn of the Internet, Ion met Elon Musk. Elon had come to Palo Alto to research battery technologies in Stanford’s labs.”
In studying Tesla, Baron also points out parallels with SpaceX. SpaceX, as Musk had originally envisioned it, has been able to reinvent the aerospace industry by reducing costs and, ultimately, saving millions with it’s reusable rockets. Baron reminds us, “Elon Musk’s SpaceX were [also] awarded contracts to design, build, and fly new spacecraft to ferry U.S. astronauts to the International Space Station (ISS)… The cost of commercial flights to the ISS will be a fraction of the cost of previous government flights, in part because rockets will be reusable.”
Similar to SpaceX, Musk’s emphasis on driving down costs remains mission critical at Tesla. Baron notes, “Despite Tesla’s requirements [for] functional design resulting in minimal waste, it often obtains better pricing for outsourced parts than its competitors. We believe its parts vendors try to accommodate this unique and fast growing company because they think Tesla’s engineering skills and designs will make them better suppliers! Further, since Tesla can insource production, it has the advantage of knowing exactly what a product should cost and how to produce it.”
And, according to Baron, GM is now following Tesla’s lead on this front. He notes that, “Mary T. Barra, General Motors’ CEO who has been trained as an engineer, has instructed her supply chain to ‘use Tesla suppliers…even if they cost more!’ Her rationale is that despite incurring higher costs to build a car, maintenance and warranty costs will be lower; car safety will be improved; and GM’s reputation will be enhanced.” That said, it might be worth pondering whether or not this move was executed strictly for reasons Baron stated in his letter — after all, GM has a tense, and sometimes adversarial, history with Tesla.
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Note: Article originally published on evannex.com, by Matt Pressman
Source: Valuewalk via Baron Funds
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
Investor's Corner
Tesla wins $508 price target from Stifel as Robotaxi rollout gains speed
The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Tesla received another round of bullish analyst updates this week, led by Stifel, raising its price target to $508 from $483 while reaffirming a “Buy” rating. The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Robotaxi rollout, FSD updates, and new affordable cars
Stifel expects Tesla’s robotaxi fleet to expand into 8–10 major metropolitan areas by the end of 2025, including Austin, where early deployments without safety drivers are targeted before year-end. Additional markets under evaluation include Nevada, Florida, and Arizona, as noted in an Investing.com report. The firm also highlighted strong early performance for FSD Version 14, with upcoming releases adding new “reasoning capabilities” designed to improve complex decision-making using full 360-degree vision.
Tesla has also taken steps to offset the loss of U.S. EV tax credits by launching the Model Y Standard and Model 3 Standard at $39,990 and $36,990, Stifel noted. Both vehicles deliver more than 300 miles of range and are positioned to sustain demand despite shifting incentives. Stifel raised its EBITDA forecasts to $14.9 billion for 2025 and $19.5 billion for 2026, assigning partial valuation weightings to Tesla’s FSD, robotaxi, and Optimus initiatives.
TD Cowen also places an optimistic price target
TD Cowen reiterated its Buy rating with a $509 price target after a research tour of Giga Texas, citing production scale and operational execution as key strengths. The firm posted its optimistic price target following a recent Mobility Bus tour in Austin. The tour included a visit to Giga Texas, which offered fresh insights into the company’s operations and prospects.
Additional analyst movements include Truist Securities maintaining its Hold rating following shareholder approval of Elon Musk’s compensation plan, viewing the vote as reducing leadership uncertainty.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
Investor's Corner
Tesla receives major institutional boost with Nomura’s rising stake
The move makes Tesla Nomura’s 10th-largest holding at about 1% of its entire portfolio.
Tesla (NASDAQ:TSLA) has gained fresh institutional support, with Nomura Asset Management expanding its position in the automaker.
Nomura boosted its Tesla holdings by 4.2%, adding 47,674 shares and bringing its total position to more than 1.17 million shares valued at roughly $373.6 million. The move makes Tesla Nomura’s 10th-largest holding at about 1% of its entire portfolio.
Institutional investors and TSLA
Nomura’s filing was released alongside several other fund updates. Brighton Jones LLC boosted its holdings by 11.8%, as noted in a MarketBeat report, and Revolve Wealth Partners lifted its TSLA position by 21.2%. Bison Wealth increased its Tesla stake by 52.2%, AMG National Trust Bank increased its position in shares of Tesla by 11.8%, and FAS Wealth Partners increased its TSLA holdings by 22.1%. About 66% of all outstanding Tesla shares are now owned by institutional investors.
The buying comes shortly after Tesla reported better-than-expected quarterly earnings, posting $0.50 per share compared with the $0.48 consensus. Revenue reached $28.10 billion, topping Wall Street’s $24.98 billion estimate. Despite the earnings beat, Tesla continues to trade at a steep premium relative to peers, with a market cap hovering around $1.34 trillion and a price-to-earnings ratio near 270.
Recent insider sales
Some Tesla insiders have sold stock as of late. CFO Vaibhav Taneja sold 2,606 shares in early September for just over $918,000, reducing his personal stake by about 21%. Director James R. Murdoch executed a far larger sale, offloading 120,000 shares for roughly $42 million and trimming his holdings by nearly 15%. Over the past three months, Tesla insiders have collectively sold 202,606 shares valued at approximately $75.6 million, as per SEC disclosures.
Tesla is currently entering its next phase of growth, and if it is successful, it could very well become the world’s most valuable company as a result. The company has several high-profile projects expected to be rolled out in the coming years, including Optimus, the humanoid robot, and the Cybercab, an autonomous two-seater with the potential to change the face of roads across the globe.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
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Tesla Full Self-Driving lands in a new country, its 7th
