A Big Tesla Shareholder Still Loves the Stock. He Has Advice for Elon Musk.
Tesla and SpaceX shareholder Ron Baron spoke at the Economic Club of New York on Tuesday. (CHIP EAST/BLOOMBERG NEWS)
There is no wavering in one of Tesla’s
biggest bulls, Baron Capital’s founder, Ron Baron, even if he has some image advice for CEO Elon Musk.
Baron expects to make 10 times his money on Tesla stock from here.
On Tuesday, Baron spoke at the Economic Club of New York. Investors always like to hear his thoughts about Elon Musk. Not much has changed. Baron is still a big believer in Musk and his companies.
“If [Musk] was a normal person, he never would have accomplished what he has,” said Baron, adding Musk is one of the best business people on Earth.
The opinion shouldn’t surprise anyone following Baron’s investing style, which aims to generate wealth by questioning conventional wisdom and investing in people for the long haul. “Exceptional takes time,” he added.
What Baron doesn’t spend much time on is the macroeconomic environment. He has “no view” on issues like interest rates or tariffs, preferring to believe that things will normalize over time.
That philosophy makes portfolio positions relatively sticky. Baron met Musk in 2010, around the time of Tesla’s initial public offering. He didn’t invest immediately. Baron, in fact, didn’t assume Tesla would survive. The car company was up against the traditional industry, auto dealers, and oil companies.
The success of the Model S helped change his mind, and Baron Capital started investing in 2014, eventually putting in about $400 million by 2016. That stake has multiplied more than 10 fold, said Baron. He expects it to multiply by 10x again. He has no timeline for that prediction.
As for how, Baron believes in Musk’s push to create truly self-driving cars. “The profits of Tesla are on the verge of going through the roof” he says.
In June, Tesla plans to launch a self-driving taxi service in Austin, Texas. Investors are following the launch closely. Meeting the June timeline should help the stock. Missing it should hurt. Baron probably doesn’t car about the exact data of the launch, he’s confident Tesla’s full-self driving technology continues to improve, he says.
Autonomy might be the future of Tesla, but investors would like to see it sell more cars. Sales in the first quarter dropped 13% year over year, fueling fears that Musk’s political activities were hurting Tesla’s brand. Baron had some thoughts about that as well.
When Musk broke out the chain saw talking about fraud and abuse, “he gave the wrong image of himself,” said Baron, adding Musk should focus on his ability to build things effectively. “I hope he starts resurrecting his image as someone who builds things.”
Baron funds hold significant stakes in Musk’s Tesla and privately held SpaceX. At the end of the first quarter in the Baron Partners Fund, Tesla and SpaceX represented 30.6% and 18.1% of investments, respectively. Baron also made a small investment in Twitter, which is now X, and which is now merging with xAI.
from BARRON'S
