Daisy Watts 
Jan 27, 2024
Despite a recent decline in Tesla's stock following a disappointing earnings outlook, fund manager David Baron remains optimistic about both Tesla and SpaceX, predicting significant gains.
Baron, who manages the Baron-Focused Growth Fund, expects Tesla's stock to increase by approximately 550pc, reaching $1,200 per share by 2030.
Additionally, he anticipates SpaceX's valuation to triple over the same period. As of December 31, 2023, Tesla and SpaceX are the largest holdings in Baron's fund, which outperformed the S&P 500 in 2023, gaining 28pc.
According to a Business Insider report, Baron acknowledged a more moderate growth outlook for Elon Musk's companies but emphasised on their resilience.
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"While he may not be growing 50pc a year as the company thought, this year in a tough environment he's still growing volume by 15pc to 20pc per year and making us $7,000 per car of gross profit,", he added while expressing optimism about Musk's leadership and alignment of interests with shareholders.
Regarding SpaceX, Baron anticipates a 20pc valuation increase in the near term, with a doubling of value within three years and a tripling by 2030.
He values Musk's significant ownership stake in both companies, emphasising on confidence that Musk will not jeopardise the trajectory of the companies.
"This was the most sobering outlook I have seen from Tesla," commented Gene Munster, managing partner at Deepwater, following Tesla's recent earnings report, which fell short of estimates and led to a stock decline.
Baron aims to increase total assets in his fund from approximately $1.3 billion to $2 billion, with the allocation to Tesla playing a crucial role in achieving this goal.
"[Musk's] interests are aligned with ours. He's not going to do anything stupid to change the trajectory of the companies," the top investor maintained.
