The topline
Billionaire investor Ron Baron, one of Tesla’s largest shareholders, told CNBC in an interview Thursday that Elon Musk’s roughly $3 billion stake in Twitter is “meaningless” and that investors should be more excited about what he predicts are massive gains ahead for Tesla, even though shares have struggled so far this year.
Baron doesn’t think Musk’s investment in Twitter will be a distraction from his work at Tesla.Baron Capital
The Key Facts
Baron, who has been a Tesla investor since 2014 and is a big fan of Musk’s, dismissed the Twitter investment in an interview with CNBC on Thursday, however, calling it “meaningless.”
The CEO of hedge fund Baron Capital, which has over $50 billion in assets under management, called Musk’s stake in Twitter “a tiny investment,” adding that it is merely “$3 billion for a man who is worth $300 billion.”
Twitter’s stock skyrocketed 27% on Monday after Musk, the world’s richest person, disclosed a large stake which made him the social media company’s largest shareholder, weeks after he criticized the platform for not allowing more free speech.
Though some analysts predict Musk could take an even bigger interest in Twitter, Baron thinks that the investment is instead “helping his marketing,” and that there’s “no way he’s taking his eye off the ball” from projects at his two companies, electric vehicle maker Tesla and rocket company SpaceX.
The “big picture,” according to Baron—who has a vested interest as one Tesla’s biggest shareholders—is the massive upside ahead for the electric vehicle maker, saying he will hold the stock for at least eight more years and still expects to make “three, four or five times our money.”
While Tesla’s stock is down roughly 15% this year and some investors were underwhelmed by lower-than-expected vehicle deliveries last quarter, Baron remains undeterred, predicting: “In four years they’ll do a million cars a quarter.”
The most important quote:
“For Tesla, this is the very beginning of what they’re doing,” Baron told CNBC. The billionaire investor, famed for being bullish on Tesla, predicts that in ten years, the electric vehicle maker will be delivering around “5 million cars a quarter.”
The Key Background
Baron’s two biggest holdings in his flagship $8.7 billion Baron Partners fund are Tesla (44% of the portfolio) and SpaceX (over 5%). E-commerce firm Shopify and brokerage firm Charles Schwab are among the top holdings. CoStar is a commercial realestate data provider, Vail Resorts is a ski resort operator, Vail Resorts is a ski resort company.
You Need to Be Watchful:
In his interview Thursday, Baron warned of rising inflation. “Everything is inflation,” he said, adding that investors should buy growth stocks in order to weather the storm. “What you have to do is protect yourself . . . investing in growth companies is the way we do that,” Baron told CNBC. The billionaire investor recommends looking for companies that are growing at a rate of over 15% per year, while reiterating that investors should “just think about the long term.”
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