Tesla will soar another 400% after torrid rally this year, billionaire stakeholder Ron Baron says

• The billionaire investor Ron Baron told CNBC on Wednesday that Tesla could become a $2 trillion company.
• Baron's asset-management firm bought Tesla in 2016 when shares were roughly $40.
• He said he was focused on Tesla's business and less concerned with the short-term stock movements.
• The electric-vehicle company is up more than 442% year-to-date.
• Watch Tesla trade live here.

The legendary investor Ron Baron told CNBC on Wednesday that Tesla could soar another 400% to reach a $2 trillion valuation.

The Baron Capital founder — a longtime Tesla bull — said he bought shares in 2016 when they traded at about $40. The stock has had a volatile ride upward and on Wednesday traded at about $450 a share, up more than 442% year-to-date.

Baron said he was more focused on Tesla's business model than the short-term "yo-yo" movements of its stock.

"What we worry about are not stock prices when we're an investor in a business. We worry about the businesses," he said. "The short term I can't have any clue what's going to happen. I do think that — it's now over $400 billion market cap. It was $40 billion when we started."

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Baron added that he'd "said for a long time" that he thought Tesla would reach a market cap of $1 trillion to $2 trillion. "With the developments that have taken place recently," he said, "I think $2 trillion is the right number."

Baron said he expected the electric-vehicle company to build more factories and have $500 million to $800 million in car sales in 10 years. "The batteries is just another unbelievable business which I'm very excited about," he added.

"So far in the first four or five years that we've owned it, the stock went up and down like a yo-yo, and that would be expected," Baron said. "Because what they were doing — they were building facilities, hiring people, coming up with design. It's a reasonable thing to bet against them."

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But Baron Capital is betting big on Tesla. With over $39 billion in assets under management, the firm has multiple growth funds loaded with the stock. Tesla is the top holding in the Baron Partners Fund, representing about 29% of its total investments.

That fund was the leader among general domestic stock funds in the third quarter, according to The New York Times. The second-best-performing fund was the Baron Focused Growth Fund, whose top holding is also Tesla.

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