Fund manager David Baron broke down his highly bullish views on Elon Musk-led Tesla and SpaceX.
He told Bloomberg Tesla can soar 550% and SpaceX can triple in valuation by 2030.
Both companies were the largest holdings in Baron's fund as of December 31, 2023.
Shares of Tesla have tanked this week following a downbeat earnings outlook, but fund manager David Baron remains bullish on Elon Musk's carmaker, as well as his rocket-producer SpaceX.
He forecasts Tesla stock to gain about 550% to hit $1,200 a share by 2030, and for SpaceX to triple in valuation over the same period, according to a recent interview conducted by Bloomberg.
Baron runs the Baron Focused Growth Fund, which counted Tesla and SpaceX as its largest holdings as of December 31, 2023. The fund climbed 28% in 2023, outperforming the S&P 500's gain of 24%.
Baron told Bloomberg that the growth outlook for Musk's companies remains strong, even if it has moderated from previous calls.
"While he may not be growing 50% a year as the company thought, this year in a tough environment he's still growing volume by 15% to 20% per year and making us $7,000 per car of gross profit," Baron said.
His comments come on the heels of a rough week for Tesla, which reported revenue and profit that lagged estimates, and warned of a production slowdown in 2024. The stock tumbled 12% on Thursday following the results and a tumultuous earnings call one analyst called a "train wreck."
"This was the most sobering outlook I have seen from Tesla," Gene Munster, the managing partner at Deepwater, said in an interviewwithCNBCWednesday.
Meanwhile, Baron expects SpaceX's valuation to increase by 20% this year. Longer term, he sees it doubling within three years and tripling by 2030. Bloomberg previously reported the company is worth more than $175 billion.
The Tesla allocation in Baron's fund is critical for his ambition to boost his total assets to $2 billion, up from current levels of about $1.3 billion.
One reason Baron is so bullish on Musk is that the world's richest person still holds a significant stake in his companies. Baron says he looks for such ownership levels when deciding where to invest.
"[Musk's] interests are aligned with ours," Baron maintained. "He's not going to do anything stupid to change the trajectory of the companies."
Tesla stock will gain 550% and SpaceX's valuation will triple by 2030 under Elon Musk's leadership, top investor says. Fund manager David Baron broke down his highly bullish views on Elon Musk-led Tesla and SpaceX. He told Bloomberg Tesla can soar 550% and SpaceX can triple in valuation by 2030.
Around 75% of Musk's wealth was derived from Tesla stock in November 2020, a proportion that fell to about 37% as of December 2022, after selling nearly $40 billion in company shares since late 2021.
However, Musk is hardly without financial resources: He owns almost 13% of Tesla shares, worth $73 billion. He also has stakes in SpaceX, worth $71 billion, and multiple other businesses, giving him a total net worth of $203 billion, according to the Bloomberg Billionaires Index.
Looking at potential scenarios. For Tesla's market cap to expand just less than twofold over the next six or so years, it would need to climb at an annualized pace of 11.5%. To be clear, it's not a stretch to believe the business can reach a $1 trillion market cap by 2030.
Tesla is the world's most valuable auto manufacturer, with a market capitalization of $611 billion. CEO Elon Musk is by far the largest shareholder, with over 20% of the company's equity. Besides Musk, the largest shareholders are asset management companies like BlackRock, Vanguard, and State Street.
With the pay package, Mr. Musk would own 20.5 percent of Tesla, up from about 13 percent. He has said he would like a 25 percent stake, noting in January that it would be “enough to be influential, but not so much that I can't be overturned.”
Musk isn't the sole owner of SpaceX. He owns 42% and had almost 79% of its voting power as of March, the Journal reported. The upshot of that is that if he wants to take out a loan from the company, he can.
In 2017, Musk bought 95,420 shares for 25 million USD. Thereafter, he invested in his own company for almost 45 million USD from May through October 2018, and again in May 2019 about 25 million USD. The latest investment was in February 2020, when he bought one million USD worth of shares.
It's unlikely Tesla's returns going forward will come anywhere near resembling the last five years. So, investors shouldn't expect a $1,000 price per share by the end of the decade.
Based on 33 Wall Street analysts offering 12 month price targets for Tesla in the last 3 months. The average price target is $174.60 with a high forecast of $310.00 and a low forecast of $22.86. The average price target represents a -4.60% change from the last price of $183.01.
SpaceX stock does not trade on public stock exchanges. SpaceX stock is considered a private security and you need to be an accredited investor to purchase shares.
SpaceX will be valued at $500 billion by 2030, billionaire investor Ron Baron predicted. The company's reusable rockets will help build "the railroad to space," he told CNBC. Baron has previously forecast that Tesla will be worth $4 trillion within a decade.
Analysts tracking Tesla stock expect its sales to rise by 2.2% to $98.87 billion in 2024 and by 17.4% to $116 billion in 2025. While adjusted earnings are forecast to narrow from $3.12 per share in 2023 to $2.53 per share in 2024, the metric could improve to $3.31 per share in 2025.
He ranks third on the Bloomberg Billionaires Index, with a net worth of $189 billion as of April 1. Tesla is his biggest asset, but Musk also is CEO of SpaceX and owns the social media platform X.
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