Tesla stock (NASDAQ:TSLA) recovered some of the previous week’s losses on Monday, gaining back $2.69% and ending the day at $241.47 per share. Amidst this recovery was a vote of confidence from one of the company’s most prolific investors, billionaire Ron Baron. In Baron Partners Fund’s first quarter shareholder letter, the legendary investor reiterated his support for Tesla, Elon Musk, and his stance on the Model 3’s long-term demand.

Baron noted in his Q1 shareholder letter that Tesla stock is the fund’s second largest holding, representing 10.7% of the firm’s total investments. The billionaire investor indicated that while Tesla is facing concerns about the near-term demand for its electric cars, the vehicles themselves, particularly the Model 3, are facing extraordinary demand in territories outside the United States. This, together with Tesla’s progress in contracting battery suppliers for Gigafactory 3 in China and the introduction of Model 3 leases, will likely help the company in the coming quarters.

“About 90 million cars per year are sold across the globe. Tesla’s newly inaugurated leasing program is creating additional demand. About 60% of cars sold by others are leased. Until April, Model 3 had no such program,” Baron wrote.

Apart from expressing his views on the Model 3’s long-term demand, Baron argued that Elon Musk’s Twitter activities put the CEO in a unique standing among Tesla’s existing and potential customers. “Elon’s genius is in remaining relevant through his Twitter commentary about his cars and being transparent about his company in dialogues with Tesla’s customers and employees,” the billionaire investor wrote, also noting that the movement of TSLA stock has been lagging when compared to the growth of the electric car maker’s business.

“We do not believe quarterly results are necessarily indicative of Tesla’s long-term success. We purchased Tesla’s stock five years ago. Tesla’s sales have since increased from $3.7 billion per year to $21 billion in 2018 and could reach an estimated $28 billion-$30 billion this year. Tesla’s share price has increased from $208 per share to $280 per share, far less than the growth of Tesla’s business. We do not expect Tesla’s share price to continue to lag the performance of its business,” Baron wrote.

Ron Baron is among Tesla’s most prominent supporters, remaining optimistic despite the company’s ups and downs over the past year. This March, Baron noted that he was betting big on the electric car maker even if some Wall St. analysts were already shying away from the stock. Back in October, Baron also stated that he believes Tesla could be worth $1 trillion by 2030, with the company’s electric car business being worth $500 billion and its energy division being worth another $500 billion.

Baron Partners Fund’s first quarter shareholder letter could be accessed here.

As of writing, Tesla stock is trading -0.92% at $239.24 per share.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

