Investor's Corner
Ron Baron doesn’t want TSLA investors to forget about SpaceX
Many Tesla investors are in it for the long haul, not looking to let go of even a fraction of their holdings for several years based on increased demand expectations. However, other opportunities to invest in hot companies are still available, and new companies will come out with IPOs in the future. One of them is another Elon Musk-headed entity called SpaceX, which Ron Baron, a legendary investor and TSLA shareholder, doesn’t want to get swept under the rug.
Despite Tesla’s overwhelming success in the market, which has made Baron a substantial $1.5 billion sum, other investments will be available. SpaceX, while not publicly traded at the current time, could be eventually. Baron believes that the aerospace company, which has massive financial backing and support from NASA and works directly with the American space administration, could be as big as the electric automaker eventually.
“In SpaceX, I think that has a chance to be just as large as Tesla. We’ll see,” Baron said during an interview with CNBC’s Squawk Box on October 14th. Baron used the interview also to outline Tesla’s path to a $2 trillion market cap.
"What I want to be known as is not only the Tesla guy but the SpaceX guy," says legendary investor Ron Baron. "In SpaceX I think that has a chance to be just as large as Tesla. We'll see." pic.twitter.com/6ljEVtkHeS
— Squawk Box (@SquawkCNBC) October 14, 2020
But SpaceX also holds a substantial place in Baron’s investment-savvy mind. While Tesla remains a primary focus because it is currently traded, Baron is looking for other opportunities to increase his portfolio’s value.
SpaceX is the answer to expanded the valuation of Baron’s massive holdings.
Baron is currently a private investor in SpaceX and explained that he could not talk much about its future plans. He did state that he has “probably a 1%” stake in the company. However, he is bullish on SpaceX, too, and wants investors to recognize that he is not only a “Tesla guy.”
“When I go to restaurants, we sit on terraces. People will comment to me, ‘Oh, there’s the Tesla guy.’ What I want to be known as, ultimately, is not just the Tesla guy, but also the SpaceX guy,” Baron said.
In terms of future outlook, Baron doesn’t believe that SpaceX will be a minuscule company compared to Tesla.
“In SpaceX, I think that has a chance to be just as large as Tesla. We’ll see,” he added.
Nobody, not even Elon Musk, knows when or if SpaceX will become a publicly-traded company. Nevertheless, on September 28th, Musk stated that the company would likely “IPO Starlink, but only several years in the future when revenue growth is smooth and predictable.”
We will probably IPO Starlink, but only several years in the future when revenue growth is smooth & predictable. Public market does *not* like erratic cash flow haha. I’m a huge fan of small retail investors. Will make sure they get top priority. You can hold me to it.
— Elon Musk (@elonmusk) September 28, 2020
Starlink’s public beta is set to begin when the most recent batch of satellites reach their target position, Musk also said in a tweet in early October. Once the internet service has a few years of consistent and reliable operation, it will likely become another publicly-traded company that Musk fans will throw their money toward in hopes of expanding their portfolio.
Disclaimer: Joey Klender is a TSLA Shareholder.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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