Tesla Stock Could Soar 550% to $5 Trillion After Notching Its Worst Day Since 2020, According to a Wall Street Expert

On March 10, Tesla (NASDAQ: TSLA) stock declined 15% in its worst trading session since 2020. Shares have now declined 51% from the record high reached in December, representing over $700 billion in lost market value.

Company-specific factors contributing to that drawdown include disappointing sales data and concerns about CEO Elon Musk becoming an increasingly political figure. Beyond those reasons, nervousness about how the Trump administration's trade policy will impact the economy has also contributed to the decline.

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Despite those threats, billionaire hedge fund manager Ron Baron recently reiterated his belief that Tesla will be a $5 trillion company within a decade. That now implies 550% upside from its current market value of $764 billion. Here's what investors need to know.

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Tesla delivered dismal financial results in 2024, and demand has continued to deteriorate in 2025

Tesla disappointed investors in the fourth quarter. In addition to recording the first decline in annual deliveries in the company's history, sales increased only 2% to $27.5 billion, operating margin declined 200 basis points, and non-GAAP earnings increased only 3% to $0.73 per diluted share. Tesla has now missed Wall Street's consensus earnings estimate in five of the last six quarters.

The bad news has carried into 2025. Consumer demand continued to weaken in January, as Tesla lost market share across the U.S., Europe, and China. Some analysts think Elon Musk's involvement in politics has been the driving force behind that trend. However, there are still reasons for investors to be optimistic.

Despite losing market share, Tesla held its leadership position in electric-car sales last year. It remains the only company in the world (including China) that can make a profitable electric car, according to Bill Selesky at Argus. Also, Elon Musk gave encouraging updates on the fourth-quarter earnings call about autonomous driving and robotics.

Tesla has multitrillion-dollar opportunities in robotaxis and autonomous robots

Tesla plans to introduce an autonomous ride-sharing service (robotaxis) in Austin in June, followed by several other U.S. cities later in the year. Ark Invest estimates the addressable market will reach $10 trillion by 2030, and Musk says robotaxis could push the company's gross margin above 70%. That would be a substantial improvement from 19% in 2024.

Adam Jonas at Morgan Stanley estimates Tesla will have 900,000 robotaxis on the road in 2035 and that each will contribute $19,200 to net income annually. That implies $17 billion in robotaxi profits in 2035. Subsequently, Jonas believes the number of robotaxis will grow more than sevenfold to 7.5 million by 2040, adding $120 billion to net income.

Hedge-fund billionaire Ron Baron is even more optimistic about autonomous driving. He recently told CNBC that every robotaxi could contribute between $30,000 and $50,000 in profits annually. In that scenario, a fleet of 900,000 robotaxis could add $45 billion to net income and a fleet of 7.5 million robotaxis could add $375 billion to net income.

Jonas and Baron arrived at those figures by making numerous assumptions about costs and consumer demand that may prove wildly inaccurate. As a result, investors shouldn't anchor to their estimates but, instead, consider the big picture: It's encouraging that a professional analyst and a successful hedge fund manager have such conviction in Tesla.

Beyond mobility and robotaxis, Tesla could disrupt the labor market with its autonomous humanoid robot Optimus. The company plans to build 10,000 Optimus models for internal use in 2025 and may start selling them to other companies as early as the second half of 2026. "Optimus has the potential to be north of $10 trillion in revenue," Elon Musk recently told analysts.

Tesla stock appears expensive right now but may look reasonably priced in hindsight

Wall Street expects Tesla's adjusted earnings to grow at 24% annually through 2026, which makes the current valuation of 99 times adjusted earnings look expensive. But the consensus estimate doesn't factor in the potential uplift from autonomous driving and robotics products a few years down the road.

Alternatively, Adam Jonas at Morgan Stanley estimates Tesla's earnings will increase by 35% annually through 2030. That forecast makes the current valuation look more reasonable. Investors who are confident that Tesla can disrupt the mobility and labor markets with robotaxis and robots should consider buying a position today.

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Trevor Jennewine has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.