Tesla stock price trades 35% off highs. Should you invest?

Written by: Michael Harris
March 5, 2021
  • Fund manager and investor Ron Baron offloaded 1.8 million Tesla shares over the last 6 months
  • Tesla stock price is trading below the $600 mark for the first time since December
  • An extension in the pullback to $500 would present a great opportunity to buy Tesla shares

Shares of Tesla (NASDAQ: TSLA) are trading more than 11% in the red for this week to extend the pullback from record highs. 

Fundamental analysis: Ron Baron’s asset management firm sold 1.8 million Tesla shares in the last 6 months

Mutual fund manager and investor Ron Baron offloaded 1.8 million Tesla shares over the last 6 months despite predicting the carmaker’s stock will hit $2,000 per share in the next 10 years. 

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The billionaire told CNBC that his investment management firm Baron Capital sold Tesla’s shares as they were starting to take huge percentages in some portfolios. 

“It was painful selling every single share,” Baron said, pointing out that he did not sell any of his personal 1.1 million shares of Tesla. He added that Baron Capital sold the shares of Tesla to help mitigate risk for certain clients.

Baron’s firm had over 6.1 million Tesla shares as of February 28, purchased at an average price of $42.34 per share. Baron added he will keep his personal Tesla shares for at least 10 years and said he told Elon Musk that he would be the last one to abandon the stock.

“We’re looking for a lot more,” he said. “I think in 10 years our target is $2,000 a share.”

Back in October, Baron said he believes Tesla will reach a valuation of $2 trillion in the future.  Baron said that his firm recently backed an EV start-up named Rivian, as well as an autonomous vehicle company owned by General Motors.

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Technical analysis: Sharp pullback

Tesla stock price is trading below the $600 mark for the first time since December. Shares have now pulled back about 40% off the record highs set in January.

Tesla weekly chart (TradingView)

An extension in the pullback to $500 would present a great opportunity to buy Tesla shares. Another major bullish wave could see the price action hit $1,000 in 2021 despite concerts over stretched valuation. 

Summary

Billionaire investor Ron Baron said his asset management firm Baron Capital sold 1.8 million Tesla shares over the past 6 months despite believing the stock will hit $2,000 per share in the next 10 years.