Legendary billionaire investor Ron Baron recently revealed that he has added a significant amount to his stake in Elon Musk’s private space company, SpaceX. In addition, Baron also noted that his investment in Tesla has been extremely profitable so far, but he believes that TSLA still has a long way to go.
Baron, founder and chief executive of investment management firm Baron Capital, shared his thoughts during a CNBC segment on Thursday. During his segment, Baron noted that he has invested in health care and travel companies. He also revealed that he has added $100 million to his stake in SpaceX, whose Starlink ramp is hitting its stride.
“The two biggest investments I’ve made in the last two months are SpaceX, where we added another $100 million, and Figs… the Lululemon of healthcare. We invested about $100 million there,” Baron noted.
Being one of Tesla’s most ardent bulls, Baron also discussed his returns to the electric vehicle maker so far. According to the legendary investor, Baron Capital has made about 20 times its investment in Tesla, and he believes the company could see even more growth in the future. After all, Baron noted that Tesla may very well be the largest company in the world, challenged only by SpaceX about a decade later.
“I love Tesla. We’ve been investing in Tesla for eight years now, since 2014. We’ve made about 20 times our money, we’ve made “about six or seven billion dollars on a $380 million investment. I think we will make 3 to 5 times our money back over the next ten years. I am very excited. I think in the next ten years, Tesla will be the biggest company in the world, and in the ten years after that, it will be challenged by SpaceX,” Baron said.
The Baron Capital founder also highlighted Elon Musk’s apparent strategies with his Gigafactories. According to the billionaire investor, each factory Musk builds costs about $7 billion, but with their operating rate of 1 million vehicles per year and the company’s strong gross profit per vehicle, each Gigafactory could net Tesla about $15 billion profit per year.
“What he (Elon Musk) is doing that other people can’t do is he’s investing now in a factory that makes a million cars a year, about $7 billion. Every time he builds one of these million car factories, it costs him $7 billion. When they have that factory that makes a million cars, the gross profit per car is about $15,000 – they’re selling something for $50,000, but it costs them $35,000. That means every time he spends $7 billion, he makes $15 billion a year,” Baron said.
Disclaimer: I’m TSLA long.
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