One of Tesla's (TSLA 0.66%) longest-standing and most consistent bulls is Ron Baron, a billionaire investor and chairman and CEO of Baron Capital. Even as Tesla aggressively cut prices this year and saw its profit margin narrow substantially, the famed investor's bullish sentiment was unfazed. He expects shares to rise to a price that's multiples higher than it's trading at today, he revealed during a CNBC interview this week.

Is the investor onto something, or is his rosy view of the electric-car maker clouding his judgment and causing him to miss some red flags?

The bull case

Highlighting his big bet on the company, Baron personally owns 4.5 million shares (valued at about $1.2 billion). Including his funds' holdings, his stake in the company stands at nearly $5 billion. It's no wonder he's so heavily invested; he believes Tesla shares could soar 4x to 5x from their current value over the next seven years, he told CNBC on Wednesday.

Supporting his bull case, Ron pointed to its founder as a key reason for his continued belief in the company. Though he admitted Tesla founder and CEO Elon Musk's unconventional ways often make Ron nervous, it takes an unconventional person to achieve extraordinary things.

Some other key reasons for Ron's optimistic view of Tesla include Musk's relentless focus on driving down costs, the company's rapid growth in deliveries, the technology and software Tesla plans to license to competitors, and its fast-growing battery business. In the long term, he believes Tesla will produce 20 million cars per year (up from less than 2 million per year today) and expects its battery business to grow to 30x its current size.

The bear case

There are some notable risks for the stock. Although Tesla is growing incredibly fast, with deliveries rising 83% year over year in Q2 and management guiding to produce about 1.8 million vehicles this year (up from about 1.4 million last year), the company's aggressive price cuts this year suggest demand could be suffering as higher interest rates make vehicle affordability more difficult.

Further, some investors may consider Tesla stock's valuation a key part of the bear case. The company is trading at 79x earnings, so the market has already priced in an expectation for rapid growth for years to come. If competition heats up, causing Tesla's growth to slow and its margins to narrow, it could be difficult for the company to live up to its stock's premium valuation.

But with deliveries of its long-awaited Cybertruck expected to begin soon and the company's lead over competition only seeming to increase, Baron's optimism is worth considering. Of course, investors should take his upbeat commentary on the stock with a grain of salt since he's a large shareholder.

But Tesla does have a lot going for it. In addition, its valuation is reasonable when viewed in the context of its recent growth and the massive size of its addressable market.

While I wouldn't bet that Tesla stock will quadruple over the next seven years, it does seem like a promising growth stock.