1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is a Texas-based company that has established a leadership position in the EV market under the guidance of its founder and CEO, Elon Musk.
Tesla, Inc. (NASDAQ:TSLA) anticipates a substantial increase in the production of its fully electric SUV Model Y and Model 3 during Q4 2022 and intends to capitalize on this growth next year as well. The company aims to reach the annual production levels of German luxury auto manufacturer BMW. Tesla, Inc. (NASDAQ:TSLA) is anticipating total production of 1.59 million Model Y and Model 3 vehicles during the first quarter of 2023. Despite the recent macroeconomic uncertainty causing a slump in the stock price of Tesla, Inc. (NASDAQ:TSLA), it is still in the green on a YoY basis, making it one of the best EV stocks in the market.
Baron Funds Shared its outlook on Tesla, Inc. (NASDAQ:TSLA) in its Q2 2022 investor letter. Here’s what the firm said:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
- First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;
- second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful.
Regardless, I was right to have spoken with Roger. That was since he outlined numerous issues we needed to consider, study, and question before we determined whether we believed Tesla could be a successful business…before we ultimately chose whether to invest in that company.
When we completed our initial due diligence on Tesla, which diligence has been ongoing since 2014, we decided to invest $360 million in Tesla over the next two years. I then called Roger and outlined why I thought we could earn 20 times our capital over the next 10 years. Roger was so certain I was wrong that he offered to bet me $1 million that Tesla would fail. “Roger, I can’t bet you a million dollars. First, if you are right, I couldn’t afford to pay you. Second, if I’m right, you’re my friend, and I couldn’t take your money.” We settled on a dinner bet…” (Click here to see the full text)
You can also take a peek at 10 Best Clothing Stocks To Invest In and Best Chinese Stocks To Buy.
