Squawk Pod: Ron Baron’s Multi-Billion dollar bet on Elon Musk - 05/12/26 | Audio Only

0:00 Bring in show music, please.

0:05 Hi, I'm CNBC producer Katie Kramer.

0:07 Today on Squawk Pod, many billion-dollar man, investor Ron Baron.

0:13 To be exact, 55 billion 898 million.

0:17 55 billion?

0:19 His client portfolio is heavily weighted in Elon Musk-led companies,

0:23 and the upcoming SpaceX IPO promises to be a big one.

0:28 This is going to become the largest company on the planet.

0:32 I think that the company over the next 10

0:35 or 15 years is going to be worth 10 trillion,

0:38 20 trillion, 30 trillion, and I could be very low.

0:42 Why he's bullish on Musk today, tomorrow, forever.

0:46 You never bet against the guy with superpowers who would never give up.

0:50 That's him.

0:52 And the rest of today's news that got us squawking.

0:54 It's Tuesday, May 12th, 2026.

0:57 Squawk Pod begins right now.

1:02 Stand back you by in 3, 2, 1.

1:05 Cue, please.

1:07 Good morning, everybody.

1:08 Welcome to Squawk Box right here on CNBC.

1:10 We are live from the Nasdaq Market Site in Times Square.

1:14 I'm Becky Quick along with Joe Kernen and Andrew Ross Sorkin.

1:17 We got some breaking news for you.

1:18 We maybe I should say this was as expected,

1:22 but eBay's board just announcing that it is declining

1:26 effectively to take up Ryan Cohen's bid from GameStop.

1:31 It is saying the following,

1:33 it's rejecting that bid saying that eBay's track record of value-creating

1:36 actions and bright standalone projects give it a you know,

1:40 a potential in the future.

1:42 I think the bigger issue is they're taking

1:44 some question about the TD Bank highly confident letter,

1:49 which we've discussed before about just how confident and how that would work.

1:54 It goes on and on and on.

1:57 Talks about the impact of GameStop's

1:58 proposal on eBay's long-term growth and profitability.

2:02 Uh and then of course, the big issue,

2:04 which I think was pointed up in the interview that that we had to some

2:07 degree and then later in some of the other conversations that Ryan Cohen had,

2:11 uh the issue of dilution uh and how

2:13 effectively they would pay for the transaction.

2:16 So

2:18 Dilution?

2:18 Dilution.

2:18 Dilution.

2:19 I heard, but I think it's also delusional, too.

2:22 It It From watching it, it seemed like it was more delusion than dilution.

2:25 Did it not?

2:26 You were You looked sort of I You know what?

2:30 In my own In my own way, I felt bad cuz I understood the transaction the whole

2:34 time and I didn't understand why he didn't just say "Look,

2:40 we're really not buying the whole company.

2:42 This is not a classic acquisition."

2:45 Because they weren't buying the whole company.

2:47 In fact, at the end of the day

2:48 Oh my god, you said it.

2:50 E- eBay shareholders would continue to own

2:53 something like 70 or 80% of the company.

2:56 And all he had to say was "That's how You know,

2:59 it's This is not a classic acquisition with a true 20% premium." I mean maybe it

3:04 Basically, he wanted them to buy GameStop at a premium

3:06 and then he wanted to run the whole entity.

3:08 Like Right.

3:09 doesn't sound very good when you say that.

3:10 And by the way, I'm going to dilute all the shareholders in the process.

3:15 Right.

3:14 Half cash, half stock.

3:17 I I I'm I hear you.

3:19 I'm just saying that that math doesn't get

3:22 you to the to the price that you're offering.

3:30 Right, and that's a pretty straightforward question.

3:31 I don't get it.

3:34 Where's the rest of the money coming from?

3:37 Andrew laid it out for you clearly.

3:39 I I don't understand your question.

3:41 We're offering half cash, half stock,

3:43 and we have the ability to issue stock in order to get the deal done.

3:49 But the full details of of the offer on our our on our website.

3:56 But you're on our air.

3:58 We we thought we'd get So but I don't understand your question.

4:05 During our interview he did for whatever reason and I don't you know,

4:08 I have great empathy for others.

4:10 He didn't he didn't he didn't say it and um It was weird.

4:13 I I mean I I didn't I didn't hoping he would.

4:16 At one point I was going to stop him and try to explain it for him.

4:18 I didn't think it was my

4:20 I was on vacation but and I didn't I didn't agonize over it.

4:23 But if a if a company worth X is going

4:26 to buy a company worth 20X and then just keep saying, "Well,

4:29 we're just going to issue stock to do it." It's like yeah, okay,

4:32 issue a billion shares of stock so that every It's like uh Zimbabwe dollars.

4:38 You can't It's so simple and he just was resisting and acting like he

4:43 didn't understand your questions and it was just uh I don't think anyone was

4:47 Michael Rubin was on last week later.

4:49 He said he thinks the guy's a very smart guy.

4:52 Didn't think that went well.

4:54 Yeah.

4:54 You know, not to take anything away from him

4:56 but that was not exactly a confidence inspiring interview.

5:00 You know, to his credit in the days the days

5:02 after he did a couple of interviews where he did

5:04 he did try to explain it and he talked about

5:06 rolling that effectively eBay shareholders have to roll into his deal

5:09 but that's what you needed to say I think A on day one and B question is is it

5:14 a compelling is it compelling for an eBay shareholder to quote

5:17 and quote roll in to somebody else's deal like this?

5:21 I think that people saw those other interviews.

5:23 I saw it on Twitter but Yeah.

5:28 President Trump says the ceasefire deal in Iran is in his words on life support.

5:33 And if you were a family going in to check out your loved one

5:36 that the doctors would tell you that he he has a 1% chance of making it.

5:41 Follow President the president's rejection of Iran's counter proposal

5:46 uh to a US plan to end the war.

5:48 CNBC's Dan Murphy uh uh joins us now uh with more from Abu

5:52 Dhabi and he's uh been to the tailor the last couple of days.

5:56 You're looking good, Dan.

5:57 You get uh you get the suits and ties going.

5:59 Uh you're you're stepping it up.

6:01 It's you're stepping it up.

6:03 What what's going on?

6:04 Well, just getting out of the heat uh in the region,

6:06 you could also say, Joe, but look, in terms of where the conflict is going,

6:10 obviously, the asset market's responding to this latest headline.

6:13 In President Trump's own words, the Iran ceasefire is on massive life support

6:18 and that is keeping oil well bid this morning.

6:20 Axios also reporting that Trump is now actively weighing

6:23 whether to resume military action against Iran after Tehran

6:27 delivered a response to the US proposal on Sunday

6:30 that the president called a {quote} piece of garbage.

6:34 Of course, Iran, according to reports,

6:35 rejected any dismantling of its nuclear facilities and also

6:39 demanded sanctions relief before making any nuclear commitments.

6:43 And it took days for Iran to reply,

6:45 as well, which seemed to uh disappoint the president.

6:48 Of course, it took him just minutes to reject it.

6:51 So, the options now on the table include resuming

6:54 Project Freedom to push ships through the Strait of Hormuz,

6:57 restarting the bombing campaign,

6:59 or even a special forces operation to secure Iran's enriched uranium stockpile,

7:04 as suggested by Israel's Prime Minister

7:06 Benjamin Netanyahu in that 60 Minutes interview.

7:09 Trump is hesitant, it would seem, on that last one, though,

7:12 and it's unlikely the US would undertake any

7:15 major military operation while the president is visiting China.

7:18 So, we're watching and waiting to see exactly what happens next,

7:22 particularly on this stalled diplomatic effort.

7:25 And then, meanwhile, a big headline out of the Gulf this morning, as well.

7:28 The Wall Street Journal reporting that the UAE

7:31 has been conducting military strikes on Iran.

7:34 Now, after weeks of speculation over whether the country was preparing to get

7:38 involved or maintain what senior officials told me was a defensive stance.

7:43 The journal now says Abu Dhabi hit

7:45 a refinery on Iran's Lavan Island in early April,

7:48 marking its entry into this conflict.

7:51 Now, the UAE has not publicly confirmed the strikes,

7:54 but it also hasn't really jumped on this story to deny it, either.

7:58 CNBC has, of course, contacted the foreign ministry for comment.

8:02 And for context here,

8:03 remember Iran fired more than 2,800 missiles and drones at the UAE.

8:08 That's more than any other country in this conflict, including Israel.

8:12 And leaders here have always maintained their right to respond.

8:17 So, whether or not this journal reporting is correct,

8:20 of course, remains to be seen at this point.

8:22 We're waiting for an official response from the country,

8:24 but in any case, this is quite a significant step,

8:28 and certainly symbolizes the reset that we've seen in how the country

8:32 views its own role and responsibility in this region moving forward.

8:36 Back over to you.

8:40 Yeah.

8:39 I I'm just wondering what if we can sort of deduce what type

8:43 of additional military action would make the most sense given that, you know,

8:48 the got two blockades basically uh happening at the same time,

8:53 but at this point and it's spelled out in a lot of different op-eds,

8:59 Iran thinks it can wait out uh President Trump,

9:03 that the pressure on him with oil prices and you know,

9:07 talking about suspending the gas tax shows that there is uh some pressure.

9:12 And how long can they wait it out?

9:14 Well, if they don't care an iota about the populace of Iran,

9:21 I'm sure they're all doing fine and, you know,

9:24 dining on fine food and they got plenty of water,

9:27 uh you know, the regime is doing fine.

9:29 Um and I I don't know when you know,

9:33 I don't know when the the struggles from the the Iranian people take precedence.

9:37 Maybe it never happens, then.

9:39 Could it be another And if he's not going to do anything while he's in China,

9:43 then the waiting goes on and and you know,

9:46 the pressure increases domestically here.

9:50 It's a fair point and you know, as the saying goes,

9:52 the Americans have the watches, but the Iranians have the time.

9:56 And of course, the time pressure is pretty critical for President Trump as well,

9:59 given the fact that he's coming into the midterms,

10:02 obviously a lot of pressure domestically, politically to wrap this thing up.

10:07 What can be achieved in China, I think is the biggest question at this point.

10:11 All eyes are on exactly what comes out of Beijing and whether or not President

10:15 Trump is able to get China's help to pressure Tehran to move the needle here.

10:20 If we don't see some kind of movement

10:22 or a breakthrough at the end of the week in China,

10:24 then obviously the odds of some kind

10:27 of military action would be increased as well,

10:29 but what would that would look like and what would actually be effective,

10:34 I think is a key question at this point as well.

10:38 Okay.

10:40 As Joe just mentioned,

10:41 President Trump is looking at suspending the federal gas tax.

10:45 The president said in the Oval Office that he would

10:47 reduce the tax shortly after saying in a press interview,

10:50 he wants to pause it for a period of time.

10:53 President Trump can't declare a gas tax holiday by himself.

10:57 He would need buy-in from Congress.

10:59 Republican members of both the House and the Senate

11:01 said that they would introduce bills to suspend the tax.

11:05 That tax currently stands at 18.4 cents a gallon.

11:08 That's the same level since 1993, going all the way back.

11:12 It has not been adjusted for inflation.

11:14 Triple A says that the average price of a gallon

11:16 of regular unleaded gasoline nationwide right now is about $4.50.

11:21 So, when you think about it, 18 and 1/2 cents is not going to be

11:25 a very significant number on a percentage basis, at least.

11:29 I think for diesel, it's a a higher, maybe 23 or 24 cents a gallon.

11:33 There are some states that have already suspended

11:35 the state taxes that they've put into effect.

11:37 I think Georgia and Indiana have both done that already.

11:39 Other states have reduced uh their gas taxes.

11:43 Um but people who are on the other side of this argument say uh first of all,

11:47 it it's not going to be a substantial decline.

11:49 It doesn't address the root problem of why oil prices have gone up so high.

11:53 Um and in the meantime, it would rob federal um funds needed

11:59 for infrastructure projects that are along the way.

12:01 Um but it it is something that's being

12:04 discussed in Congress at the moment as well.

12:08 We are learning more about the CEO

12:10 delegation that will accompany the president to China.

12:13 White House official telling CNBC that President

12:15 Trump has invited Tesla CEO Elon Musk,

12:17 Apple CEO Tim Cook, BlackRock chief Larry Fink, and Boeing head Kelly Ortberg.

12:22 That inclusion of Musk could signal a further thawing of relations between

12:26 the president and the world's richest person

12:28 after their public falling out last year.

12:31 I don't know about that.

12:32 We can discuss that in a second.

12:34 Also expected to join the president's delegation the CEOs of Blackstone,

12:37 Citigroup, GE Aerospace, Goldman Sachs, Micron, and Qualcomm.

12:41 Interestingly, uh Nvidia CEO Jensen Huang, who has of course been uh in close

12:46 orbit around the president since his return to office,

12:49 notably not part of the trip.

12:50 He told Jim Cramer last week it would be a privilege

12:52 to accompany the president to China if he were invited.

12:55 Of course, it may not make sense for somebody like him to be

12:59 invited given uh that we're not we don't want necessarily to sell those chips.

13:04 And then to sell those chips.

13:06 No, he does.

13:06 No, he wants to sell those chips.

13:08 like to sell those chips, but he would probably also like to lay low

13:11 at the moment because Congress has not been a big fan.

13:14 There have been congressional leaders on both sides of the aisle

13:16 who have not been a fan of allowing those chips to

13:19 I'm sure he wants to he would like to sell those chips and be at that meeting.

13:22 I think that it's the message but I think

13:24 part of this whole situation where who's been invited,

13:26 who's not is a been a messaging story from the White

13:29 House about what the US wants to sell into China,

13:32 what they don't want to sell into China, and then separately I was going to say,

13:35 I do think to some degree there may be

13:36 a thaw in with the relationship with the president and Elon,

13:40 and I think you even saw that a little

13:41 bit at Charlie Kirk's funeral and in other places,

13:44 but I think the bigger issue,

13:46 even more than that, is the idea that we do

13:49 want to sell Teslas and other things like that into China.

13:53 So, I think it's bigger, almost economic argument.

13:56 Some diplomacy at work behind the scenes probably on this, too.

14:02 Yeah.

14:02 We don't want to sell any of their cars here.

14:04 No.

14:04 But we don't want to sell our car their cars here.

14:06 It complicates complicates the matter.

14:11 T's will be next.

14:13 Coming up on Squawk Pod, one of Elon Musk's biggest bulls.

14:17 Well, that's more than 35% of your funds that are now in Elon Musk companies.

14:22 It is Ron Baron.

14:23 He grew his portfolio from about $10 million in 1982 to 10 times that by 1992,

14:31 and now he's at 55 billion,

14:33 and a big chunk of it is wrapped up in the world's richest man.

14:37 There's a lot of plays that people can have.

14:39 I don't need other plays,

14:40 but you can have a lot of plays

14:42 that people will benefit from the work that he's doing, and that he's a comic.

14:46 This is an unbelievable person.

14:49 An extended exclusive conversation with Ron Baron right after this.

15:02 This is Squawk Pod.

15:04 Stand by Andrew by 3, 2, 1.

15:07 Up and Andrew, Q.

15:08 You're right.

15:09 You're watching Squawk Pod right here on CNBC.

15:11 I'm Andrew Ross Sorkin along with Joe Kernan and Becky Quick.

15:14 We have a lot of ground to cover with our next guest,

15:17 beginning with Elon Musk's SpaceX,

15:19 which is planning the largest stock debut in history.

15:22 So, let's get right to Ron Baron.

15:24 He is an early investor in SpaceX.

15:27 He is the founder, the CEO, and the portfolio manager of Baron Capital,

15:31 which started out in 1982 with $10 million in assets under management.

15:36 By 1992, it had grown to $100 million,

15:38 and today it is around $50.9 billion in assets under management.

15:43 Ron, I want to thank you for being with us this morning.

15:46 Um to be exact, $55 billion 898 million.

15:51 $55 billion?

15:53 $55 billion 898 million.

15:55 us in November of last year, it was $45 billion.

15:57 What What grew?

15:59 Oh, uh SpaceX grew.

16:01 And uh I guess I don't know, but I mean that's the big one.

16:04 So, that happens to be $15 billion out of our $55 or $56 billion is SpaceX.

16:11 And Tesla's our second biggest at $5 billion.

16:13 So, we made our clients $61 billion in profits

16:17 and ourselves since 1992 when we had $100 million.

16:22 $61 billion came from $100 million.

16:25 And now I think that in the case of Tesla,

16:27 which we've been investing in, met him in 2010 in an IPO.

16:32 Uh took me 4 years uh to be con-

16:36 come convinced that he was going to be successful.

16:37 I thought he was brilliant, kept talking to him, kept visiting him.

16:40 2014, go to visit him again.

16:43 I said, "Man, I have to invest in this now.

16:45 Uh now is the time." Stock triples from 25 to 75.

16:49 I don't own a share.

16:50 It doubles again.

16:51 The pain is too great.

16:53 And then And then we invest $400 million between 2014

16:58 and 16 and make about $8 billion so far in profit.

17:01 And I think we're going to make five times that amount in 10 years.

17:04 And then SpaceX, starting in 2017 because I have this relationship with him,

17:10 um it it's very good.

17:13 Uh and I learn about SpaceX, and I'm interested in it.

17:16 I say, "I'd like to invest in that." And they do these tenders

17:19 twice a year in SpaceX cuz every single employee is a shareholder in SpaceX.

17:25 They say, "Becky, you are this fantastic engineer,

17:27 you're making $250,000 a year,

17:30 but what uh you're now worth $5 million." Don't you think

17:34 it'd be a smart thing to sell some of that stock,

17:36 a little bit, to put the money in the bank and protect your family?

17:39 So, they have these tenders twice a year for a billion dollars a piece.

17:43 And uh we've been one of the largest,

17:45 if not the largest purchaser in each of these deals.

17:47 And recently, and they get oversubscribed

17:50 without any announcements and no bankers, been oversubscribed in one afternoon.

17:55 And so, we're treated just like one

17:57 of the largest institutions in each one of these offerings.

18:00 Basically, you are paying the employees so that they

18:03 can become more liquid and hold on to those things.

18:05 And that's how you have gotten your ownership stake Exactly.

18:07 So, now this private company Yes, so we've invested in

18:09 Which by the way, that's part of the reason

18:10 that this company has been able to remain private for so long.

18:13 Yeah, cuz that right.

18:15 And uh and and so, we've even invested about a billion seven since 2017.

18:22 And that's now worth about $15 billion at current market prices.

18:26 So, of the 61 billion uh profits, 20 billion's come from him.

18:31 You have been somebody who has been um an apostle

18:35 of the kind of speaking about this for years.

18:37 I can remember having a conversation with you probably back 2020, 2021.

18:42 You tried to convince me to do it.

18:43 We're not allowed to invest and I had to tell you

18:45 that, but you were saying SpaceX is where it's going to be.

18:48 This is the investment you really should get into.

18:50 Had to say no the whole way through.

18:52 You're now looking at this company about to go public.

18:55 And And what do you think the opportunity is here?

18:57 What do you think happens?

18:58 This This is going to become uh the largest company on the planet.

19:04 This is This is So, when you go public,

19:06 I don't know if it's going public at one and a half

19:08 trillion or one and three quarters trillion or maybe a little bit more.

19:12 But where it goes public, I think that the company over the next 10

19:16 or 15 years is going to be worth 10 trillion, 20 trillion, 30 trillion.

19:22 And I could be very low.

19:23 Could be very low on where it's going to be.

19:26 So what So today we can talk a little bit about infrastructure.

19:30 Why?

19:30 Why?

19:30 Yeah, let's let's just talk about why because I think like 70 billion

19:33 of that would be what what the public can actually buy into, I think.

19:37 70 billion is exactly right.

19:38 In fact, right after the offering,

19:40 then they've changed the rules so that 5 days after the IPO is completed,

19:46 there will be one index in which it will be included.

19:50 10 days, there will be another index in which it's included.

19:53 15 days, there will be another index in which it's included.

19:56 You're talking about the NASDAQ index?

20:00 The president of New York Stock Exchange came You know, when when I was young,

20:04 I drove an ice cream truck one summer and maybe summer and a half.

20:08 And one of the things that was important to me was I had

20:11 to get my Carnival Boardwalk ice cream truck to the beach route before Mr.

20:16 Softy got there.

20:18 And so you have So so one of the guys in my office said in the New

20:21 York Stock Exchange president wanted to come

20:24 over and talk to me for some advice.

20:26 The president says Pat Patellino is our chief operating officer.

20:30 He said, "Do you ever think when you're

20:31 driving an ice cream truck that the president

20:33 of New York Stock Exchange is going to come talk to you for advice?

20:35 Are you serious?" And and So I said, "Well, I was able to beat Mr.

20:39 Softy to where he was going and and and so so the way

20:43 came to ask you for advice about whether

20:44 they should put that into the index early?

20:46 Well, she was telling me about the different indexes,

20:48 but she was also hoping that they would list

20:52 on the New York Stock Exchange and they chose They chose the NASDAQ.

20:55 I think they've chosen NASDAQ, which is where all the technology companies are.

21:00 And she was saying that, you know,

21:02 there are all these other things that she could offer.

21:04 But that was part part the auction process

21:05 where the two exchanges were bidding it up saying,

21:08 "Hey, we can offer to get you into the index sooner." I don't know.

21:11 I I I think they pretty much decided that as a leading technology company,

21:16 they should be listed on Nasdaq where all

21:19 the other large technology companies have been listed.

21:22 But but they're not There's a lot So, what enabled this company is him.

21:27 So, he comes up with the idea that you'll

21:29 be able to launch a rocket and reuse it.

21:32 And and no one ever did that before and no other

21:35 rocket company was interested in doing that because if they did,

21:38 then what would happen is that there would not be demand for as many rockets.

21:42 So, nobody wanted to do this and and they always said it was impossible.

21:45 They said it was impossible cuz nobody tried.

21:47 Mhm.

21:47 And when they did try, it takes No nobody's been able to accomplish it.

21:50 So, that's what enabled this.

21:51 That's what enabled us to have Starlink.

21:54 And Starlink, after you have that and we have the Falcon 9,

21:58 then it brings it up and comes back.

22:01 Then we decided, "Hey, wait.

22:02 There's a demand for in space uh data centers

22:05 and having instead of having data centers on our planet where

22:08 it's very very difficult to get The governor won in New

22:12 Jersey because she said our electricity bills are too high.

22:15 We're going to stop this data center

22:17 construction making our electricity bills go up.

22:19 Her roommate when she was in Congress is

22:21 the is a candidate for governor in Virginia.

22:24 She won.

22:25 Same same idea.

22:27 So So here, you have people who are But not in my backyard.

22:30 Yep.

22:30 That's the deal.

22:31 And nobody wants it in their backyard, so send it

22:33 I would have thought they would like it because they would pay taxes,

22:36 but the people don't like it because you know,

22:39 not enough jobs and because their electricity bills are going up.

22:41 And the water usage, too.

22:43 Water is short and electricity is a problem.

22:46 And the water you need for cooling, which you don't need in space.

22:49 Right.

22:49 You don't need the cooling in space number

22:50 one as long as you have giant radiators.

22:53 And then electricity, which is a huge cost,

22:55 you don't need that either cuz you're using the sun.

22:57 So, basically, you're getting free sun free electricity and free cooling

23:01 once you get into space and so now because of the idea

23:05 of going to space we've now developed the Starship and the Starship

23:09 once that works is going to be a hundred times

23:12 as you know a hundred I guess it's two hundred tons

23:15 that they could bring to space and now the Falcon 9 brings

23:18 I think 17 or 18 tons to space so huge unlock

23:22 is coming from Starlink it's coming from from the uh from the

23:26 I want to talk more about this in a second

23:28 but I you are somebody who has completely tied

23:30 your fortunes to Elon Musk and you have done very

23:33 very well by doing that it's the reason that your firm

23:36 has so much in assets under management at the moment

23:38 but you pointed out yourself that the ownership that you

23:41 have right now 27.2% of your funds are invested

23:45 in in SpaceX the second largest position is Tesla with 8.4%

23:49 so that's more than 35% of your funds that are

23:52 now in Elon Musk companies if you're right and if

23:56 SpaceX takes off on the IPO you could be talking

23:59 about a much larger percentage I remember a time when

24:02 you sold Tesla shares the only time you sold it

24:04 and the reason you gave is because you didn't want

24:06 to be that leveraged to one company to one person

24:09 to Elon Musk have you changed your mind completely on that?

24:13 No I've never changed I never wanted to sell

24:14 any shares it's just I I was getting

24:16 criticized everywhere so we sold in 2022 at the end

24:23 of the year we sold about a quarter

24:27 of our shares in Tesla for clients personally

24:31 I have never sold a share and in fact

24:34 I made a deal with our with our directors

24:37 of our mutual fund I promised them I would

24:40 no longer invest for myself this is in 1992 or 95 somewhere I said I would no

24:46 longer invest for myself and when I tried

24:47 to get everyone else to invest in Tesla at Baron

24:50 Capital no one wanted to do it and and so I went to the board and I

24:54 said I'm not taking in opportunity if you let

24:56 me do this I can make this much money,

24:59 which is going to make Baron Capital stronger uh and financially.

25:03 And I I'm not doing it for myself even,

25:05 just doing it for that account cuz I own Baron Capital.

25:07 Right.

25:08 11.7% of the assets under management are the the Baron family.

25:13 Right.

25:13 So, you're invested right alongside with your clients.

25:17 Right.

25:16 Uh and and so I said,

25:18 "And if you let me do this, uh I'm the last person to purchase it,

25:22 and I'll be the last person to sell it.

25:23 I will not sell a share until I sell all of my clients' stock across the board."

25:28 But do you regret having sold those shares to caving

25:31 to pressure at the time to sell your investor shares?

25:33 still over sudden the stock was up 20 times.

25:37 Yeah.

25:36 And uh and over sudden it became such a large investment for my clients,

25:40 I said, uh and and I started getting calls and they were nervous.

25:43 And so I said, "Okay,

25:44 we'll sell a quarter of your stock." Personally, I not a share.

25:48 Uh well, with Baron Capital, not a thing.

25:50 I have never sold a single share of Tesla, uh and and never will.

25:54 So, have the shareholders not Are Are they no longer calling

25:57 and asking for you not to be so exposed to Elon Musk?

26:00 Is that the

26:01 heard that lately.

26:02 Now it's Now it's Tesla's up 40 times.

26:05 So, it was up 20 times, and so now it's up 40 times after 3

26:07 or 4 years uh when it has changed very little.

26:11 Most people can't tolerate having an investment

26:14 which doesn't change a lot in price over a long period of time uh because

26:19 they're investing in themselves to do new things.

26:21 Now is a great time for Tesla.

26:23 Uh if you read the transcript of the last earnings call,

26:27 and you look at the chart,

26:28 they give you this table of a book and they describe a picture.

26:32 It's a picture book.

26:33 So, it's a paragraph on each page

26:35 describing the factories and the opportunities they have.

26:38 So, Tesla, when you read about all the things that they're doing right now,

26:41 now is the time for Tesla.

26:43 And I think that Tesla, you know, as I mentioned before,

26:46 I think it's going to be 2,000 or 2,500 over the next uh 10 years.

26:51 Um but that that's that's one.

26:53 But, SpaceX is the one when we're talking about

26:56 how they're going to do on the IPO, who knows?

26:59 But, the idea that I have, that we have,

27:02 is that this 1 and 1/2 or 1 and 3/4 or a little bit more, uh, uh, IPO

27:09 Trillion dollar IPO, right?

27:10 Yeah.

27:10 is I I think it's going to be, as I said, 10, 20, 30 times that amount, uh,

27:16 and you should try to figure out for your families

27:18 how you can get to own some SpaceX.

27:20 It will be the largest company on the planet.

27:22 Do you expect, and there's a lot of people who think a year or two from now,

27:25 after this happens, that SpaceX will ultimately

27:28 buy Tesla and will all be one company?

27:32 Is that in the cards for you?

27:37 Um, so, I think there's pluses and minuses.

27:40 And, uh, one of the directors said to me, Ron, if you're asked that question,

27:45 I'm sure a lot of people ask you that question cuz they think you know,

27:47 and you don't know anything, and I really don't know anything.

27:51 Uh, and, uh, you know, uh, just say you don't know.

27:55 So, I don't know.

27:56 No, I I I recognize you don't know.

27:58 I'm I'm curious what whether you think

28:00 that that would be a a good thing ultimately.

28:02 And whether you're whether you're betting on that.

28:04 Meaning like that's something in your in your mind

28:05 that that you're you're betting on the future all these companies.

28:08 Do you think that happens?

28:09 I'm not betting on that.

28:11 Uh, Because?

28:13 Because, you know, if they're able to accomplish

28:15 a lot the way they are structured right now,

28:17 and I don't, uh, yeah, there's, as I said, pluses and minuses.

28:21 I don't want to discuss them now, but I mean,

28:23 I I think there's good reasons why you should

28:25 do it and good reasons why you shouldn't do it.

28:27 And whatever he decides is the best thing to do,

28:30 you know, when you're worth trillions of dollars,

28:32 ultimately for him, uh, he's not doing this to make as much money as he can.

28:36 He's doing this because he has some feeling about the planet.

28:40 And so, basically, maybe it makes it easier to operate,

28:42 uh, which is true, I'm sure.

28:45 Uh, but then you get a different valuation on the company, which is also true.

28:48 So, I don't know what he's going to do,

28:50 but whatever he does, I'm sure there will be good rationale for it.

28:53 And whatever he does,

28:55 it's very unlikely that uh that I would say it's not a good idea.

28:59 How do I know?

29:00 He's the only one.

29:00 I'm not trying to run a company, he's running the company.

29:03 You know, it's really hard as an analyst when you're following

29:06 a company this that changes so much and it grows so fast.

29:09 I've never invested in anything like this before my entire life.

29:12 I've never invested in anything like this before.

29:15 I was talking with one of the guys at Goldman

29:18 uh and uh he's and we were talking about valuations.

29:20 He says, "Ron, did you ever know about

29:23 the East Indies uh Trading Company?" I said,

29:26 "Yeah, a little bit." And he says, "1604.

29:29 What happened is they have the ability to go from Europe to Asia,

29:33 trade uh you know, spices and fabrics.

29:36 And and they had exclusivity for 22 years.

29:39 And they went out and they raised the money from the people

29:42 in Holland and they raised it with uh uh you know,

29:45 with uh with uh inventing the uh the uh limited liability corporation.

29:51 So, all you could lose was what you put up, not anything.

29:54 You wouldn't lose your house and your job and your family.

29:56 That's all you could lose.

29:57 And then they had a trading operation.

29:59 They raised the money and for 22 years they had

30:02 exclusive ability to get to to to Asia from Europe.

30:06 And they became the largest, most powerful company on the planet.

30:09 This is what we got with SpaceX.

30:11 They're getting you to space and the things they're doing in space

30:14 are different than anything that anyone can do on this planet.

30:17 And and this is going to be a huge space economy.

30:20 So, there's there's a lot of plays that people can have.

30:23 I don't need other plays, but you can have a lot of plays that people will

30:26 benefit from the work that he's doing and that he's accomplished.

30:30 This is an unbelievable person.

30:32 Has your investor base changed over time?

30:34 Are we Do you have people who are so eager to get in on SpaceX

30:38 that they have been drawn to Baron Funds over the last few years?

30:41 a lot of flows right now because of that.

30:44 And and what I try to tell people is that yeah,

30:47 it's really nice that the stock is going

30:49 to be priced higher when when they get public.

30:54 But the thing you should be investing in is not cuz you're going to make

30:57 that, but rather the big gain is when I'm I'm buying so at the IPO price,

31:03 I've I've got an order for a billion dollars

31:06 that I want to buy some more stock at the IPO.

31:08 I don't know we're going to get filled, but I'm going to try.

31:11 And and and I think and I'm not buying it cuz I'm buying at the IPO price

31:16 and I'm not buying it now because I think

31:18 that it is you better in the short term.

31:21 I'm doing it because I believe deeply that this company is a major game changer.

31:27 Now we're talking about infrastructure.

31:28 So the Starlink, they are going to be the internet for the entire planet.

31:34 The internet for the entire planet.

31:36 Nobody can do this except for them.

31:38 So they're going to had the I had it on United got it immediately.

31:42 Amazing, right?

31:43 It was amazing.

31:44 Yeah.

31:44 Uh Delta didn't do it because they wanted to have

31:46 an interface where when you got on the plane,

31:49 you would see a Delta image and you pay the bill to Delta.

31:52 And he didn't want that.

31:53 He said, "You want it?

31:55 We'll we'll be delighted to put on it and they're doing it." NetJets.

31:58 NetJets says that I'm responsible and you know,

32:01 one of the people is responsible for for them to be able to get

32:06 the the the internet on NetJets and they're

32:09 now doing 50 planes a month, 600 this year.

32:13 And I haven't seen it on my plane yet.

32:15 Uh whatever planes you I use, but um they're going to get 600 a year.

32:20 I I think the flight NetJets might have 1,500 planes,

32:25 1,200 planes, but they're getting it on it.

32:28 And once you fly on that and you have that and you don't

32:31 have the ability to use the phone when you're flying around ordinarily know,

32:35 of a sudden you get it there, I think it's going to be a game changer for that.

32:37 By the way, it's going to be changer for United.

32:39 Yeah.

32:40 Yes.

32:40 I think actually United is going to have

32:41 for the for a for a period of time because you know,

32:43 Delta's not going to have it for a period of time.

32:45 There's going to be a period where if you want to have Starlink,

32:49 which is a game changer.

32:50 You know what it used to take.

32:51 This is folks are going to get on those planes.

32:52 You have to do back flips to finally get it.

32:54 I had a or two weeks ago I had a United flight that I couldn't get the Wi-Fi on.

32:58 It's a just it's a you want Starlink?

32:59 Yep.

33:00 Yep.

33:00 Done.

33:01 Done.

33:01 But but you have to believe it's more than Starlink.

33:05 Yes.

33:03 So Starlink alone, I think can be worth um 14, 15 trillion dollars.

33:12 Starlink alone As a global player.

33:14 As as assuming that these satellites are literally covering the entire globe.

33:18 So they have 10,000 satellites now.

33:20 They're on the way to 20,000.

33:21 They have 9 million customers last year.

33:23 They have 15 million this year.

33:25 They're going to grow 50% a year.

33:27 They could have 300 million customers in 10 years.

33:30 Then they got enterprise, then they got the government,

33:32 and there's 8 billion people on the planet.

33:34 3 billion don't have the internet.

33:36 Is that By the way, are you assuming that Kuiper,

33:38 which of course is the Amazon version of this?

33:41 You would never bet against Jeff Bezos.

33:43 But he's going to have a niche.

33:45 You can't compete with the guy who has all those satellites

33:48 up there already and all those customers and already serving.

33:51 And he's going to be like a virtual network and and sooner or later

33:54 one of these big telcos is going to sell them access to the city.

34:00 So he's now got the he bought spectrum.

34:03 So there's a lot of services that

34:05 Are you think he's going to actually be providing like

34:09 ground level cellular service as well and as a integrated product?

34:13 If you have more than 50% of the people doing business with you on the internet,

34:20 you are the internet.

34:21 And so he's going to have I I think the opportunity

34:25 is somewhere around now trillion dollars of annual revenues for him,

34:33 and and then maybe making 70, 80% profit margin 10 years, 12 years.

34:39 And that could be worth 14, 15 trillion dollars alone, just Starlink.

34:44 ever a chance that the government I mean, you just said he is the internet.

34:47 If if you're more than 50%, is that ever a chance that it would bring

34:51 the government in to look at it as monopolistic behavior?

34:55 Of course.

34:56 I mean, you know, we live in a very litigious society.

35:02 Yeah.

35:01 And and and and and and people are jealous or upset

35:07 by but but his goal is always making things better, faster, cheaper.

35:12 Better, faster, cheaper.

35:14 Whether it's how many railings you put on platforms that are

35:17 used in the factories to prevent people from falling off.

35:20 He looks at purchase orders when he goes

35:22 to visit office and when he goes to visit factories.

35:25 Looks at purchase orders.

35:26 Show me the purchase orders.

35:28 And and here there's two railings.

35:30 What do you mean you need the second railing for?

35:31 And then and then why do we need these railings

35:35 on the low platforms instead of only on the high platforms?

35:38 Nobody's going to hurt if you fall off a low platform.

35:41 So so basically every it's Pay attention to the culture.

35:44 Yeah.

35:45 The culture is low cost.

35:48 As quickly as you can get the cost as low

35:50 as you can cuz everything gets commoditized sooner or later.

35:53 Competitive advantage now and you got to his advantage

35:56 is he innovates faster than anyone else.

35:59 So the culture innovate fast and and and perform

36:03 and do things better than other people.

36:05 Okay, so two questions.

36:06 First of all, is Elon Musk the most

36:09 important person you've ever met in your life?

36:11 Yes.

36:11 Yeah.

36:12 And unusual for sure and brilliant for sure and he's got a heart for sure.

36:19 I really like him.

36:21 And you know, people when you asked me before about tying my business uh,

36:25 closely to him as I to hear my whole life has been you know,

36:31 since 19 70 I come to New York in 1982 and I'm I'm I'm

36:37 living in a basement in 1982 and and doing chores for my friend's wife.

36:43 And then 1982 uh, start up Capital and I'm

36:47 an analyst in 1970s and then in 1982 uh,

36:52 you know not very much and then and then

36:55 a bunch and now it's going to be I think big.

36:59 And and uh, and so so so all these years build this business

37:08 and then I push all the chips to the center of the table.

37:11 And people say, "Really?

37:13 Is that what you're going to do?" It's your all-in moment.

37:15 All-in.

37:17 Yeah.

37:16 And and and so uh, so I think so I I

37:21 I sort of think analogizing to I'm not like like J.P.

37:24 Morgan, but he's the guy who financed Rockefeller and I

37:27 certainly am not financing Elon Musk, but I'm part of it.

37:31 And and to be tied to the most successful man on the planet,

37:36 uh, I think it's a good thing.

37:38 And clearly risky.

37:40 Yeah.

37:40 Uh, but uh, that's my game and I think by uh, next 10 years or so.

37:45 So also Risky from the from the fact that it's a key man.

37:48 One person.

37:49 Yeah, it's one person.

37:49 But there's 130,000 people there, 150,000, 140,000.

37:53 He gets the best people.

37:54 And and people apply for jobs.

37:56 I think they hire 30,000 people a year and they have uh,

38:00 you know, 4 million applicants, 3 million, 5 million applicants.

38:04 People everybody wants to work there for one of his companies and want to be

38:07 able to to go into meetings with him and he walks away and says,

38:10 "You can do this." And he said,

38:12 "We can use reuse rockets." Really, you can reuse rockets?

38:15 Yeah, not only that, what we're going to do is

38:16 we're going to land them on a boat offshore initially.

38:20 You're going to land them on a boat, really?

38:21 And and so he'll walk out of the room and and Gwynne will say,

38:25 "If he says you can do it,

38:26 you can do it." And then when they look at how much things cost,

38:29 he knows how much everything costs.

38:32 And if it doesn't if he's not being charged the right amount,

38:35 and if they're making too much of a profit,

38:37 then he's going to do it himself through a Terafab.

38:39 So, he needs to have 50 times the number of chips,

38:44 the number of compute that's available right now, 50 times.

38:48 So, he goes to TSMC and he goes to Samsung and he gets

38:52 to tries to get and nobody's going to be They got great businesses.

38:55 So, you know, why are they going to take a big risk

38:57 building a factory they don't know that he's got this huge demand for.

39:01 So, so they say, "Well, I don't know.

39:03 We can give you the" And and they he can't get enough chips.

39:07 So, he's going to build a factory called Terafab.

39:10 And he has this whole idea about what he can do.

39:12 So, the chips that we're buying from Nvidia, so we'll never stop buying them,

39:17 but the chips he buys from Nvidia, he uses 3% of what Nvidia provides, 3%.

39:23 So, he says, "Gee, and and they make an 80% profit margin.

39:26 So, gee, I can do that and I have I I'm a good manufacturer and what I

39:31 can do is I can I have ideas and how we can make them faster, cheaper, simpler,

39:36 and I can do that." And when he does that, he's

39:38 going to build this facility he's going to make the chips

39:41 at a fraction of what it's going to cost to make

39:43 50 times as many as the whole world is producing.

39:47 Yeah, obviously you are a believer and it

39:48 has done very well for you and your shareholders.

39:51 Ron, I want to thank you very much for joining us this morning.

39:54 One quick question before you go.

39:56 Um you said it looks like he's leaning

39:58 towards the Nasdaq for the IPO for SpaceX.

40:00 Is that based on what you know, or is that just based on what you've read?

40:04 It's based on what Adena Friedman told me.

40:07 Uh she's the head of the Nasdaq She's the head of the New York Stock Exchange.

40:10 So, I don't know if And you know, I was disadvantaged coming to talk to you now,

40:15 because I told you before that I wanted to wait

40:17 until the S1 until I could could read it.

40:21 Right.

40:21 So the information So I have an advantage over other people trying

40:25 to invest in SpaceX now cuz I've been investing in it for 9 years.

40:30 Right.

40:29 Uh so basically I have knowledge I don't have I don't need to get the knowledge

40:34 this uh that is available uh right now this uh you know the in a quiet period.

40:40 I've already got the knowledge.

40:41 Right.

40:42 From being an investor for so long.

40:43 Right.

40:43 And so I know what you know what I

40:47 I have this idea about what it's going to become.

40:49 So it's Starlink, it's Starship, it's Compute AI,

40:52 it's Oh I didn't even terraform and it's Grok.

40:55 So can I get 2 more minutes on Grok?

40:58 Probably not two.

40:59 How about uh 40 seconds?

41:01 Grok is like uh Anthro Anthropic.

41:05 And so Anthropic just Anthropic invested

41:07 in Compute and they've done amazing they've grown

41:10 from 9 billion dollars of annualized revenues

41:12 to 40 billion in four or five months.

41:15 9 billion to 45 billion.

41:17 The opportunity is something like uh 27 trillion

41:21 a year and they're at 9 uh 45 billion.

41:24 And Grok is the same thing.

41:26 Grok what Elon thought is what we need is compute.

41:29 That's the limiting factor compute.

41:31 So he invested in Compute the other guys all invested in software.

41:34 Now they just announced a deal yesterday or the day before the day before where

41:39 uh Anthropic is going to use the compute that we've built in in uh in Memphis.

41:45 We build it cheaper, faster, and better than anyone else.

41:48 Superfast, that's us.

41:50 Like Oh and by the way, so the idea about betting against someone,

41:54 yeah, you never bet against the guy with superpowers who would never give up.

41:57 That's him.

41:58 Okay.

41:58 Ron Baron, thank you very much for being with us today.

42:01 We appreciate it.

42:02 Thanks for having me.

42:05 We'll be right back.

42:13 And that is Squawk Pod for today.

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