Ron Baron says Tesla's valuation can hit $4 trillion, but 'SpaceX has a chance to be even bigger'
Provided by Dow Jones
Nov 4, 2023 1:16 PM EDT
By Nathan Vardi
The billionaire investor has beaten the market by betting on Elon Musk. He lands on the MarketWatch 50 list and, in this interview, remains as bullish as ever.
When Ron Baron was starting an investment business, he got some advice from Steve Wynn. The casino magnate told Baron to name his investment company after himself as a way to show clients and customers that he promised to stand behind it. Some four decades later, Baron Capital has made its most important investment in Elon Musk, Inc.
Baron invested $570 million in Tesla (TSLA), mostly between 2014 and 2016, which was about 2% of his assets under management at the time. Today, after selling some shares, Tesla represents about 10.9% of Baron Capital's $41 billion under management, and the winning position has helped Baron's main mutual fund become the only mutual fund to beat the Nasdaq COMP over the last 5, 10 and 15 years, according to a recent Bloomberg analysis, during which time it returned 17% annualized.
"You get rich by being long-term and by being focused, by owning a small amount of companies," Baron said in an interview.
Baron epitomizes a bullish buy-and-hold investing style that has worked in the current environment, where a few big tech stocks, like Apple (AAPL), Microsoft (MSFT) and Alphabet (GOOGL), have accounted for a disproportionate share of the stock market's gains. Baron runs a concentrated portfolio and owns one of the best performing big tech companies, Tesla, and has benefitted from the electric-car maker's remarkable stock-market run. As a result, he lands on The MarketWatch 50 list of the most influential people in markets.
Musk himself may have just thrown cold water on Tesla's long-anticipated cybertruck and expressed concern about the ability of consumers to buy his expensive cars in the face of high interest rates. But Baron says Tesla's stock will keep rising over time and its market capitalization can grow from its current $630 billion to as much as $4 trillion in 10 years.
"In the case of Tesla, we are convinced that people cannot do what they're doing and that, ultimately, it's not just going to be a car company and it's not just going to be a battery company," said Baron. "All the other car companies, which 50 years ago, elected to become much more profitable and outsource supplies and compute to other people. We're going to be like Intel was inside of computers. This is going to be Tesla inside of cars. All the cars are going to be using Tesla autonomous driving. No one else can possibly compete."
Bullish
AI
