March 01, 2023

Billionaire Investor Ron Baron forecasts 300% return on Tesla over the next decade

Iconic investor Ron Baron says that Elon Musk’s companies are "innovating at the speed of light" in a recent interview with David Rubenstein for Bloomberg Wealth. Baron has high hopes for SpaceX and believes Tesla could return 300% to investors over the next ten years.

Source: Baron Funds / Tesla

Looking back, Baron predicted Tesla would evolve into a massive player in the auto industry. His firm, Baron Capital Management, was among Elon Musk’s largest investors in 2016, with a 1% stake in the Silicon Valley automaker.

And what happened? Baron says, "We invested $380 million between 2014 and 2016, which was 1.5% of our assets at the time. So far, we’ve made $4 billion in profit and I think we’re gonna make maybe three or four times that in the next 10 years."

Baron explains why he initially invested in Elon Musk's electric car company. "With Tesla, I thought the opportunity was to convert the cars that we make in the U.S. from gasoline to electric. And that hadn’t been accomplished before," he says.

"In order for this to happen, you had to be a spectacular engineer, and a great leader and have an understanding of technology. And then you had to fight the entrenched interests, which were the car dealers and the automobile companies and the oil companies. I was betting on Elon Musk and most people bet against him," says Baron.

With SpaceX, Baron says, "It’s the same idea. You’re disrupting a cost-plus industry, so all of the aerospace companies didn’t do research and they didn’t want to innovate. What they would do is subcontract out the work on these rockets so they became more and more expensive. And the government would just pay it."

"So Elon comes along, and says, ‘I got a cheap way to get to space. And the cheap way is by using the rockets over and over and over again.’ And everyone else said that was impossible. But our man did it. And as a result, he’s able to get to space cheaply. And now there’s an opportunity for a $1 trillion satellite broadband market," explains Baron.

“They’re innovating at the speed of light,” explained Baron. “And they’re doing that with the cars. And they’re doing that with space.”

Asked how Musk can run both companies at once, Baron admits, "he’s working ungodly hours, totally dedicated, [and] doesn’t need very much sleep. I was speaking to a director of SpaceX two nights ago and I said, ‘How is Elon doing?’ And she says, ‘He’s doing unbelievably. He lives in this small cottage, two bedrooms, on this desert property.’ And he works all but five hours a day."