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Bold Predictions for the Future: Tesla and SpaceX Soaring Under Elon Musk's Leadership : Up 550% according to fund manager David Barron
By Alan Watts
By Phil Rosen | January 26, 2024
In the realm of investment, fund manager David Baron stands out for his unwavering optimism regarding two of Elon Musk's pioneering ventures: Tesla and SpaceX. Despite recent fluctuations in Tesla's stock, Baron's foresight sees a dazzling future, with a projected 550% surge to reach $1,200 per share by 2030. Simultaneously, SpaceX, Musk's space exploration company, is anticipated to triple in valuation over the same period, according to Baron's recent interview with Bloomberg.
As of December 31, 2023, both Tesla and SpaceX held the position of the largest holdings in Baron's fund. The Baron Focused Growth Fund demonstrated exceptional performance in 2023, posting a 28% gain that outpaced the S&P 500's 24% increase.
Baron's bullish stance is grounded in the enduring growth prospects of Musk's ventures, even amid recent challenges faced by Tesla, such as a downbeat earnings outlook and warnings of a production slowdown in 2024. Despite these concerns, Baron emphasizes that Musk's companies continue to exhibit robust growth, with Tesla's annual volume growing between 15% to 20%, generating an impressive $7,000 per car in gross profit.
Acknowledging a moderated growth outlook compared to previous estimates, Baron remains resolute in his confidence, stating, "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."
Tesla's recent challenges led to a 12% dip in its stock, prompting concerns and critical evaluations. However, Baron remains optimistic about Musk's ownership stake, considering it a crucial factor in preserving alignment of interests and ensuring strategic decisions that propel the companies forward.
Baron's predictions extend beyond Tesla's immediate hurdles, with a forecast for SpaceX's valuation to increase by 20% in the coming year. Looking further into the future, he envisions a doubling of SpaceX's valuation within three years and an impressive tripling by 2030. Previous reports from Bloomberg estimated SpaceX's value at over $175 billion.
For Baron, the allocation of Tesla in his fund is a strategic move to achieve his ambition of boosting total assets to $2 billion, up from the current $1.3 billion. He underscores Musk's substantial stake in his companies as a key factor in their continued success, stating, "[Musk's] interests are aligned with ours. He's not going to do anything stupid to change the trajectory of the companies."
In a week that brought challenges for Tesla, including a "sobering outlook," according to analysts, Baron's steadfast confidence in Elon Musk's leadership and the enduring potential of Tesla and SpaceX adds a compelling narrative to the evolving saga of these visionary companies. Investors and enthusiasts alike eagerly await how these bold predictions will unfold over the next decade.
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