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Ron Baron’s Multi-Billion Dollar Bet on Elon Musk 5/12/26
00:42:48
Longtime Tesla and SpaceX bull Ron Baron is on set for an extended, exclusive interview. Baron, whose $55B AUM relies heavily on Elon Musk, discusses his faith in the world’s richest man. Plus, eBay has rejected GameStop’s bid to buy it, a cohort of U.S. CEOs are accompanying President Trump on his trip to Beijing, and CNBC’s Dan Murphy reports on the state of the conflict in Iran after President Trump said the U.S. ceasefire is “on life support.” Dan Murphy - 6:27 Ron Baron - 16:40 In this episode: Dan Murphy, @dan_murphy Joe Kernen, @JoeSquawk Becky Quick, @BeckyQuick Andrew Ross Sorkin, @andrewrsorkin Katie Kramer, @Kramer_Katie
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- [00:00]
Narrator/Announcer
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Schwab Advertiser
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before. Like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading bring in show music please.
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Katie Kramer
Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, Many billion dollar man investor Ron Baron to be exact.
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Ron Baron
55,8980-550000-00000.
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Katie Kramer
His client portfolio is heavily weighted in Elon Musk led companies and the upcoming SpaceX IPO promises to be a big one.
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Ron Baron
This is going to become the largest company on the planet. I think that the company over the next 10 or 15 years is going to be worth 10 trillion, 20 trillion, 30 trillion and I could be very low.
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Katie Kramer
Why he's bullish on Musk today, tomorrow, forever.
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Ron Baron
You never bet against a guy with superpowers who would never give up. That's him.
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Katie Kramer
And the rest of today's news that got us squawking. It's Tuesday, May 12, 2026. Squawk Pod begins right now.
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Ron Baron
Stamp Becky Bye.
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Andrew Ross Sorkin
In 3, 2, 1.
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Ron Baron
Q please.
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Joe Kernan
Good morning everybody. Welcome to Squawk Box right here on cnbc. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorkin.
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Andrew Ross Sorkin
We've got some breaking news for you. We maybe I should say this was as expected but ebay's board just announcing that it is declining effectively to take up Ryan Cohen's bid from GameStop. It is saying the following. It's rejecting that bid saying that ebay's track record of value creating actions and bright standalone projects give it a potential in the future. I think the bigger issue is they're taking some question about the TD Bank. A highly confident letter which we've discussed before about Just how confident and how that would work goes on and on and on. Talks about the impact of GameStop's proposal on eBay's long term growth and profitability. And then of course the big issue which I think was pointed up in the interview that, that we had to some degree and then later in some of the other conversations that Ryan Cohen had the issue of dilution and how effectively they would pay for the transaction.
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Becky Quick
So delusion, dilution. Del. I heard, I think it's also delusional too. From watching it, it seemed like it was more delusion than delusion, did it not? You were, you looked sort of, I
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Andrew Ross Sorkin
don't know, you know what? In my own way, puzzled. In my own way I felt bad because I understood the transaction the whole time and I didn't understand why he didn't just say look, we're really not buying the whole company. This is not a classic acquisition because they weren't buying the whole company. In fact, at the end of the
- [03:43]
Becky Quick
day, oh my God, you said it.
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Andrew Ross Sorkin
He ebay shareholders would continue to own something like 70 or 80% of the company. And all he had to say was that's how, you know it's, this is not a classic acquisition with a true 20% premium. I mean maybe basically he wanted to
- [04:00]
Joe Kernan
buy GameStop at a premium and then he wanted to run the whole entity like.
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Andrew Ross Sorkin
Right.
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Joe Kernan
That doesn't sound very good when you say that. And by the way, I'm going to dilute all the shareholders.
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Becky Quick
Half cash, half stock.
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Andrew Ross Sorkin
I, I, I'm, I hear you. I'm just saying that that math doesn't get you to the, to the price that you're offering.
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Joe Kernan
So Brian, that's a pretty straightforward question. I don't get it. Like where's the rest of the money coming from? Andrew laid it out pretty clearly.
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Becky Quick
I, I don't understand your question.
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Andrew Ross Sorkin
We're offering half cash, half stock and we have the ability to issue stock in order to get the deal done.
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Becky Quick
But the full details of the offer on our are on our website.
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Joe Kernan
But you're on our air. We, we thought we'd get
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Becky Quick
so, but
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Andrew Ross Sorkin
I don't understand your question. During our interview he did, for whatever reason and I don't, you know, I have great empathy for others. He didn't, he didn't, he didn't say it and it was weird. I, I mean I, I didn't, I was hoping he would. At one point I was going to stop him and try to explain it for him. I didn't think it was my I
- [05:16]
Becky Quick
was on vacation, but I didn't, I didn't agonize over. But if a, if a company worth X is going to buy a company worth 20x and then just keep saying, well, we're just going to issue stock to do it, it's like, yeah, okay, issue a billion shares of stock so that every, it's like Zimbabwe dollars. You can't, it's so simple. And he just was resisting and acting like he didn't understand your questions. And it was just, I don't think anyone was.
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Joe Kernan
Michael Rubin was on last week. Later he said he thinks the guy's a very smart guy. Didn't think that went well. You know, not to take anything away from him, but that was not exactly a confidence inspiring interview.
- [05:55]
Andrew Ross Sorkin
You know, to his credit, in the days, the days after he did a couple of interviews where he saw that, he did try to explain it and he talked about rolling that effectively ebay shareholders who have to roll into his. But that's what you needed to say, I think A, on day one and B, question is, is it compelling, is it compelling for an ebay shareholder to quote, unquote, roll in to somebody else's deal like this?
- [06:17]
Becky Quick
I think we saw those other interviews. I saw it on Twitter.
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Andrew Ross Sorkin
But yeah,
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Becky Quick
President Trump says the ceasefire deal in Iran is, in his words, on life support. And if you were a family going into check out your loved one, that the doctors will tell you that he has a 1% chance of making it. Followed President. The president's rejection of Iran's counter proposal to a U.S. plan to end the war. CNBC's Dan Murphy joins us now with more from Abu Dhabi. And he's been to the tailor the last couple. You're looking good, Dan. You get, they get the suits and ties going. You're stepping it up. You're stepping it up. What's going on?
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Dan Murphy
Or just getting out of the heat in the region? You could also say, Joe, but look, in terms of where the conflict is going, obviously the asset market's responding to this latest headline. In President Trump's own words, the Iran ceasefire is on massive life support and that is keeping oil well bid. This morning, Axios also reporting that Trump is now actively weighing whether to resume military action against Iran after Tehran delivered a response to the US Proposal on Sunday that the president called a, quote, piece of garbage. Of course, Iran, according to reports, rejected any dismantling of its nuclear facilities and also demanded sanctions relief before making any nuclear commitments. And it took days for Iran to reply as well, which seemed to disappoint the president. Of course, it took him just minutes to reject it. So the options now on the table include resuming Project Freedom to push ships through the Strait of Hormuz, restarting the bombing campaign, or even a special forces operation to secure Iran's enriched uranium stockpile, as suggested by Israel's Prime Minister Benjamin NETANYAHU in that 60 Minutes interview. TRUMP is hesitant, it would seem, on that last one, though, and it's unlikely the US would undertake any major military operation while the President is visiting China. So we're watching and waiting to see exactly what happens next, particularly on this stall diplomatic effort. And then meanwhile, a big headline out of the Gulf this morning as well. The Wall Street Journal reporting that the UAE has been conducting military strikes on Iran. The now, after weeks of speculation over whether the country was preparing to get involved or maintain what senior officials told me was a defensive stance, the Journal now says Abu Dhabi hit a refinery on Iran's Levant island in early April, marking its entry into this conflict. Now, the UAE has not publicly confirmed the strikes, but it also hasn't really jumped on this story to deny it either. CNBC has, of course, contacted the Foreign Ministry for comment. And for context here, remember, Iran fired more than 2,800 missiles and drones at the UAE. That's more than any other country in this conflict, including Israel. And leaders here have always maintained their right to respond. So whether or not this Journal reporting is correct, of course, remains to be seen. At this point, we're waiting for an official response from the country, but in any case, this is quite a significant step and certainly symbolises the reset that we've seen in how the country views its own role and responsibility in this region moving forward. Back over to you.
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Becky Quick
Yeah, I'm just wondering what if we can sort of deduce what type of additional military action would make the most sense given the, you know, the got two blockades basically happening at the same time. But at this point, and it spelled out in a lot of different op eds, Iran thinks it can wait out President Trump, that the pressure on him with oil prices and talking about suspending the gas tax shows that there is some pressure. And how long can they wait it out? Well, if they don't care an iota about the populace of Iran, I'm sure they're all doing fine and dining on fine food and they got plenty of water. The regime is doing fine. And I don't know when, you know, I don't know when the struggles from the Iranian people take precedence. Maybe it never Happens, Dan, could it be another? And if he's not going to do anything while he's in China, then the waiting goes on. And, you know, the pressure increases domestically here.
- [10:46]
Dan Murphy
It's a fair point. And, you know, as the saying goes, the Americans have the watches, but the Iranians have the time. And of course, the time pressure is pretty critical for President Trump as well, given the fact that he's coming into the midterms. Obviously, a lot of pressure domestically, politically to wrap this thing up. What can be achieved in China, I think, is the biggest question at this point. All eyes are on exactly what comes out of Beijing and whether or not President Trump is able to get China's help to pressure Tehran to move the needle here. If we don't see some kind of movement or a breakthrough at the end of the week in China, then obviously the odds of some kind of military action would be increased as well. But what that would look like and what would actually be a, I think, is a key question at this point as well.
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Becky Quick
Okay,
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Joe Kernan
as Joe just mentioned, President Trump is looking at suspending the federal gas tax. The president said in the Oval Office that he would reduce the tax shortly after saying in a press interview he wants to pause it for a period of time. President Trump can't declare a gas tax holiday by himself. He would need buy in from Congress. Republican members of both the House and the Senate said that they would introduce bills to suspend the tax. That tax currently stands at 18.4 cents a gallon. That's the same level since 1993, going all the way back. It has not been adjusted for inflation. AAA says that the average price of a gallon of regular unleaded gasoline nationwide right now is about $4.50. So when you think about it, 18 and a half cents is not going to be a very significant number on a percentage basis, at least, I think for diesel, it's a little higher, maybe 20 or 24 cents a gallon. There are some states that have already suspended the state taxes that they put into effect. I think Georgia and Indiana have both done that already. Other states have reduced their gas taxes. But people who are on the other side of this argument say, first of all, it's not going to be a substantial decline. It doesn't address the root problem of why oil prices have gone up so high. And in the meantime, it would rob federal funds needed for infrastructure projects that are along the way. But it is something that's being discussed in Congress at the moment as well.
- [13:04]
Andrew Ross Sorkin
We are learning more about the CEO delegation that will accompany the president to China. White House official telling CNBC that President Trump has invited Tesla CEO Elon Musk, Apple CEO Tim Cook, BlackRock chief Larry Fink, and Boeing head Kelly Ortberg. That inclusion of Musk could signal a further thong of relations between the President and the world's richest person after their public falling out last year. I don't know about that. We can discuss that in a second. Also expected to join the president's delegation, the CEOs of Blackstone, Citigroup, GE Aerospace, Goldman Sachs, Micron and Qualcomm. Interestingly, Nvidia CEO Jensen Huang, who has, of course been in close orbit around the President since his return to office, notably not part of the trip. He told Jim Cramer last week it would be a privilege to accompany the President to China if he were invited. Of course, it may not make sense for somebody like him to be invited given that we're not. We don't want necessarily to sell those chips.
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Joe Kernan
And then he wants to sell those chips.
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Andrew Ross Sorkin
No, he does. No, he wants to sell those chips.
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Joe Kernan
He would probably like to sell those chips, but he would probably also like to lay low at the moment because Congress has not been a big fan. There have been congressional leaders on both sides of the aisle who have not been a fan of allowing those chips.
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Andrew Ross Sorkin
Oh, no, I'm sure he wants to. He would like to sell those chips and be at that meeting. I think that it's the message. But I think part of this whole situation, or who's invited, who's not, has been a messaging story from the White House about what the US Wants to sell into China, what they don't want to sell into China. And then separately, I was going to say, I do think to some degree there may be a thawing with the relationship with the President and Elon. And I think you even saw that a little bit at Charlie Kirk's funeral and in other places. But I think the bigger issue, even more than that, is the idea that we do want to sell Teslas and other things like that into China. So I think it's a bigger, almost economic argument.
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Joe Kernan
Some diplomacy at work behind the scenes, probably on this, too.
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Becky Quick
We don't want to sell any of their cars here.
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Andrew Ross Sorkin
No, but we don't want to sell our. Their cars here. Complicates the matter.
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Ron Baron
Cheese will be next.
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Katie Kramer
Coming up on Squawk Pod, one of Elon Musk's biggest bulls.
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Joe Kernan
That's more than 35% of your fund that are now in Elon Musk companies.
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Katie Kramer
It is Ron Baron. He grew his portfolio from about $10 million in 1982 to 10 times that by 1992. And now he's at 55 billion and a big chunk of it is wrapped up in the world's richest man.
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Ron Baron
There's a lot of plays that people can have. I don't need other plays, but you can have a lot of plays that people will benefit from the work that he's doing. And he's a copy. This is an unbelievable person.
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Katie Kramer
An extended exclusive conversation with Ron Baron right after this.
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Schwab Advertiser
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- [16:23]
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- [16:52]
Dan Murphy
What made you confident that you could
- [16:54]
Joe Kernan
do something that hadn't been done before? I have no fear of failure.
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Narrator/Announcer
Trailblazing women, changing the game One of
- [17:01]
Joe Kernan
my favorite pieces of advice? Think about what your boss's boss needs.
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Ron Baron
Leadership can look in many, many different forms.
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Mathnasium Advertiser
It really does come down to just trusting yourself.
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Narrator/Announcer
Life is short and you just gotta
- [17:12]
Joe Kernan
think big to accomplish big things.
- [17:14]
Narrator/Announcer
Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday. Wherever you get your podcasts.
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Katie Kramer
This is Squawk Pod.
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Andrew Ross Sorkin
Stand Andrew by 3, 2, 1, up and Andrew Q. You're watching Squawk Box right here on cnbc. I'm Andra Sorkin along with Joe Kernan and Becky Quick.
- [17:38]
Joe Kernan
We have a lot of ground to cover with our next guest, beginning with Elon Musk's SpaceX, which is planning the largest stock debut in history. So let's get right to Ron Baron. He is an early investor in SpaceX. He is the founder, the CEO and the portfolio manager of Barron Capital, which started out in 1982 with $10 million in assets under management. By 1992, it had grown to $100 million. And today it is around $50.9 billion in assets under management. Ron, I want to thank you for being with us this morning.
- [18:10]
Ron Baron
To be exact, 55 billion. 898 million.
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Joe Kernan
55 billion.
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Ron Baron
55 billion.
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Joe Kernan
Okay. When you were on with us in November of last year, it was 45 billion. What grew?
- [18:22]
Ron Baron
Oh, SpaceX grew. And I guess. I don't know, but, I mean, that's the big one. So that happens to be 15 billion out of our 55 or 56 billion dollars is SpaceX. And Tesla is our second biggest at 5 billion. So we made our clients $61 billion in profits and ourselves since 1992, when we had $100 million, 61 billion came from 100 million. And now I think that in the case of Tesla, which we've been investing in, met him in 2010 and an IPO, took me four years to become convinced that he was going to be successful. I thought he was brilliant. Kept talking to him, kept visiting him. 2014, go to visit him again and said, man, I have to invest in this now. Now is the time. Stock triples from 25 to 75. I don't own a share. It doubles again. The pain is too great. And then we invest $400 million between 2014 and 16 and make about $8 billion so far in profit. And I think we're gonna make five times that amount in 10 years. And then SpaceX starting in 2017, because I have this relationship with him, it's very good, and I learn about SpaceX and I'm interested in it. I say, I like to invest in that. And they do these tenders twice a year in SpaceX, because every single employee is a shareholder in SpaceX and say, Becky, you are this fantastic Engineer. You're making $250,000 a year, but what you're now worth, $5 million. Don't you think it'd be a smart thing to sell some of that stock a little bit to put the money in the bank and protect your family? So they have these tenders twice a year for a billion dollars apiece. And we've been one of the largest, if not the largest, purchaser in each of these deals. And recently. And they get oversubscribed without any announcements, and no bankers been oversubscribed in one afternoon. And so we're treated just like one of the largest institutions in each one of these offerings.
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Joe Kernan
Basically, you are paying the employees so that they can become more liquid and hold on to those things. And that's how you've gotten your ownership stake.
- [20:31]
Ron Baron
Exactly.
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Joe Kernan
As private company.
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Ron Baron
Yes, we've invested in which, by the
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Joe Kernan
way, that's part of the reason that this company has been able to remain private for so long.
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Ron Baron
Yeah, because. Right. And so we've invested about a billion 7 since 2017, and that's now worth about $15 billion at current market prices. So of the 61 billion profits, 20 billion has come from him.
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Joe Kernan
You have been somebody who has been an apostle kind of speaking about this for years. I can remember having a conversation with you, probably back 2020, 2021. You tried to convince me to do it. We're not allowed to invest and I had to tell you that. But you were saying SpaceX is where it's going to be. This is the investment you really should get into. Had to say no the whole way through. You're now looking at this company about to go public. And what do you think the opportunity is here? What do you think happens?
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Ron Baron
This is going to become the largest company on the planet. This is. So when you go public, I don't know if it's going public at 1 1/2 trillion or 1 1/3 trillion or maybe a little bit more. But where it goes public, I think that the company over the next 10 or 15 years is going to be worth 10 trillion, 20 trillion, 30 trillion. And I could be very low, could be very low on where it's going to be. So what? So today we can talk a little bit about why.
- [21:54]
Joe Kernan
Yeah, let's talk about why. Because like 70 billion of that would be what the public can actually buy into. I think 70 billion.
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Ron Baron
Exactly. Right. In fact, right after the offering, then they've changed the rules so that five days after the IPO is completed, there will be one index in which it will be included. Ten days there will be another index in which it's included. 15 days there will be another index in which it's included.
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Joe Kernan
You're talking about the NASDAQ index.
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Ron Baron
The president of the New York Stock Exchange, when I was young, I drove an ice cream truck one summer and maybe a summer and a half. And one of the things that was important to me was I had to get my carnival bar ice cream truck to the beach route before Mr. Softie got there. And so you have. So. So one of the guys in my office said, and the New York Stock Exchange president wanted to come over and talk to me for some advice. And my friend says, pat Paddlino is our chief operating officer. Do you ever think when you're driving that ice cream truck that the president, New York Stock Exchange is going to come talk to you for advice? Are you serious? And, and, and I said, well, I was able to beat Mr. Softy to where he was going. And, and so, so he came to
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Joe Kernan
ask you for advice about whether they should put that into the index early.
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Ron Baron
Well, she was telling me about the different indexes, but she was also hoping that they would list on the New York Stock Exchange. And they chose, they chose the Nasdaq. I think they've chosen Nasdaq, which is where all the technology companies are. And she was saying that, you know, there are all these other things that she could offer.
- [23:28]
Joe Kernan
But that was part of the auction process where the two exchanges were bidding it up, saying, hey, we can offer to get you into the index sooner.
- [23:34]
Ron Baron
I don't know. I think they've pretty much decided that as a leading technology company, they should be listed on Nasdaq where all the other large technology companies have been listed. But there's a lot. So what enabled this company is him. So he comes up with the idea that you'll be able to launch a rocket and reuse it. And no one ever did that before. And no other rocket company was interested in doing that because if they did, then what would happen is that there would not be a demand for as many rockets. So nobody wanted to do this. And they always said it was impossible. They said it was impossible because nobody tried. And when they did try, it takes. Nobody's been able to accomplish it. So that's what enabled this. That's what enabled us to have Starlink and Starlink. After you have that and we have the Falcon 9, then it brings it up and comes back. Then we decided, hey, wait, there's a demand for in space data centers and having. Instead of having data centers on our planet where it's very, very difficult to get, the governor won in New Jersey because she said our electricity bills are too high. We're going to stop this data center construction making our electricity bills go up. Her roommate when she was in Congress is the. Is a candidate for governor in Virginia. She won Same, same idea. So here you have people who are
- [24:52]
Joe Kernan
saying, not in my backyard.
- [24:54]
Ron Baron
That's the deal.
- [24:55]
Joe Kernan
And nobody wants it in their backyard. So send.
- [24:57]
Ron Baron
I would have thought they would like it because it would pay taxes, but the people don't like it because not enough jobs and because their electricity bills
- [25:04]
Joe Kernan
are going up and the water usage too.
- [25:06]
Ron Baron
Water is Short. And electricity is a problem.
- [25:09]
Joe Kernan
And the water you need for cooling, which you don't need in space, right?
- [25:12]
Ron Baron
You don't need this cooling in space, number one, as long as you have giant radiators and then electricity, which is a huge cost, you don't need that either because you're using the sun. So basically you're getting free electricity and free cooling once you get into space. And so now because of the idea of going to space, we've now developed the starship. And the starship, once that works, is going to be 100 times as power. You know, 100. I guess it's 200 tons that they could bring to space. And now the Falcon 9 brings, I think, 17 or 18 tons of space. So huge unlock is coming from Starlink.
- [25:47]
Joe Kernan
Hey, Rob, I want to talk more about this in a second, but you are somebody who has completely tied your fortunes to Elon Musk and you have done very, very well by doing that. It's the reason that your firm has so much in assets under management at the moment. But you pointed out yourself that the ownership that you have right now, 27.2% of your funds are invested in SpaceX. The second largest position is Tesla with 8.4%. So that's more than 35% of your funds that are now in Elon Musk companies. If you're right, and if SpaceX takes off on the IPO, you could be talking about a much larger percentage. I remember a time when you sold Tesla shares, the only time you sold it and the reason you gave is because you didn't want to be that leveraged to one company, to one person, to Elon Musk. Have you changed your mind completely on that?
- [26:36]
Ron Baron
No, I've never changed. I never wanted to sell any shares. It's just I was getting criticized everywhere. So we sold in 2022, at the end of the year, we sold about a quarter of our shares in Tesla for clients. Personally, I have never sold a share. And in fact, I made a deal with our, with our directors of our mutual fund. I promised them I would no longer invest for myself. This is in 1992 or 95 somewhere. I said I would no longer invest for myself. And when I tried to get everyone else to invest in Tesla at Baron Capital, no one wanted to do it. And so I went to the board and I said, I'm not taking anyone's opportunity. If you let me do this, I can make this much money, which is going to make Barron Capital stronger and financially. And I'm not doing it for myself even just doing because I own barren
- [27:30]
Joe Kernan
capital, 11.7% of the assets under management are the, the Barron family. Right, so you're invested right alongside with your clients.
- [27:39]
Ron Baron
Right. And so I said and if you let me do this, I'm the last person to purchase it and I'll be the last person to sell it. I will not sell a share until I sell all of my clients stock across the board.
- [27:51]
Joe Kernan
But do you regret having sold those shares to caving to pressure at the time to sell your investors?
- [27:56]
Ron Baron
My clients all of a sudden Stock was up 20 times and all of a sudden it became such a large investment for my clients. I said, and I started getting calls and they were nervous and so I said okay, we'll sell a quarter of your stock. Personally, not a share. Well, with Baron Capital I have never sold a single share of Tesla and never will.
- [28:17]
Joe Kernan
So have the shareholders not, are they no longer calling and asking for you not to be so exposed to Elon Musk?
- [28:24]
Ron Baron
I haven't heard that lately. Now, now It's Tesla's up 40 times.
- [28:28]
Joe Kernan
Right?
- [28:28]
Ron Baron
So it was up 20 times and so now it's up 40 times after three or four years when it has changed very little. Most people can't tolerate having an investment which doesn't change a lot in price over a long period of time because they're investing in themselves to do new things. Now is a great time for Tesla. If you read the transcript of the last earnings call and you look at the chart, they give you this table of a book and they describe a picture. It's a picture book, so it's with paragraphs on each page describing the factories and the opportunities they have. So Tesla, when you read about all the things that they're doing right now, now is the time for Tesla. And I think that Tesla, you know, as I mentioned before, I think it's going to be 2000 or 2500 over the next 10 years. But that's, that's one. But SpaceX is the one. When we're talking about how they're going to do on the ipo, who knows. But the idea that I have, that we have is that this one and a half or one and three quarters or a little bit more ipo, trillion dollar IPO is, I think it's going to be As I said, 10, 20, 30 times that amount. And you should try to figure out for your families how you can get to own some SpaceX. It will be the largest company on the planet, do you expect?
- [29:46]
Andrew Ross Sorkin
And there's a lot of people who think a year or two from now after this happens, that SpaceX will ultimately buy Tesla and will all be one company. Is that in the cards for you?
- [30:00]
Ron Baron
So I think there's pluses and minuses and one of the directors said to me, Ron, if you're asked that question, I'm sure a lot of people ask you that question because they think you know and you don't know anything and I really don't know anything and you know, just say you don't know. So I don't know.
- [30:20]
Andrew Ross Sorkin
No, I, I, I recognize, don't know. I'm curious what, whether you think that that would be a, a good thing ultimately, whether you're betting on, that's something in your, in your mind that, that you're betting on the future. All these companies. Do you think that happens?
- [30:32]
Ron Baron
I'm not betting on that because, because you know, they're able to accomplish a lot the way they are structured right now. And I don't, there's, as I said, pluses and minuses. I don't want to discuss them now. But I mean I, I think there's good reasons why you should do it and good reasons why you shouldn't do it. And whatever he decides is the best thing to do, you know, when you're worth trillions of dollars. Ultimately for him, he's not doing this to make as much money as he can. He's doing this because he has some feeling about the planet. And so basically maybe it makes it easier to operate, which is true, I'm sure, but then you get a different valuation on the company, which is also true. So I don't know what he's going to do, but whatever he does, I'm sure there will be good rationale for it. And whatever he does, it's very unlikely that, that I would say it's not a good idea. How do I know? He's the only. I'm not trying to run a company. He's running the company. You know, it's really hard as an analyst when you're following a company like this. It changes so much and grows so fast. I've never invested in anything like this before. My entire life. I've never invested in anything like this before. I was talking with one of the guys at Goldman and he's, we're talking about valuations. He says, ron, did you ever know about the East India's trading company? I said yeah, a little bit. And he says 1604. What happened is they had the ability to go from Europe to Asia trade, you know, spices and fabrics and, and they had exclusivity for 22 years. And they went out and they raised the money from the people in Holland and they raised it with, you know, with, with inventing the, the limited liability corporation so all you could lose was what you put up. Not anything we wouldn't lose. Your house and your job and your family, that's all you could lose. And then they had a trading operation. So they raised the Money and for 22 years they had exclusive ability to get to, to, to Asia from Europe. And they became the largest, most powerful company on the planet. This is what we got with SpaceX. They're getting you to space. And the things they're doing in space are different than anything anyone can do on this planet. And this is going to be a huge space economy. There's a lot of plays that people can have. I don't need other plays, but you can have a lot of plays that people will benefit from the work that he's doing and that he's accomplished. This is an unbelievable person.
- [32:55]
Joe Kernan
Has your investor base changed over time? Do you have people who are so eager to get in on SpaceX that they have been drawn to barren funds over the last few years?
- [33:04]
Ron Baron
We're getting a lot of flows right now because of that. And, and what I try to tell people is that, yeah, it's really nice that the stock is going to be priced higher when, when they get public, but the thing you should be investing in is not because you're going to make that, but rather the big gain is when I'm, I'm buying. So at the IPO price, I've, I've got an order for a billion dollars that I want to buy more stock at the ipo. I don't know we're going to get filled, but I'm going to try. And I think. And I'm not buying it because I'm buying it at the IPO price and I'm not buying it now because I think that it needs to do better in the short term. I'm doing it because I believe deeply that this company is a major game. No one's talking about infrastructure. Starlink. They are going to be the Internet for the entire planet. The Internet for the entire planet. Nobody can do this except for them. So they're going.
- [34:03]
Becky Quick
I had it on United States, got it immediately.
- [34:06]
Ron Baron
Amazing, right?
- [34:06]
Becky Quick
It was amazing, yeah.
- [34:08]
Ron Baron
Delta didn't do it because they wanted to have an interface where when you got on the plane you would see a Delta image and you pay the bill to Delta. And he didn't want that. He said, you want it? We'll, we'll be delighted to put on. And they're doing it. NetJets. NetJet says that I'm responsible and, you know, one of the people is responsible for, for them to be able to get the, the Internet on NetJets. And they're now doing 50 planes a month, 600 this year. And I haven't seen it on my plane yet, whatever planes I use, but they're going to get 600 a year. And I think the flight. NetJets might have 1500 planes, 1200 planes, but they're getting it on it. And once you fly on that and you have that, and you don't have the ability to use the, the phone when you're flying around ordinarily, and all of a sudden you get it there,
- [34:59]
Andrew Ross Sorkin
I think it's gonna be a game changer for that, by the way. It's a game changer for United.
- [35:02]
Joe Kernan
Yeah.
- [35:03]
Ron Baron
Yes.
- [35:03]
Andrew Ross Sorkin
I think actually United is gonna have, for the, for, for a period of time because, you know, Delta is not going to have it for a period of time. There's going to be a period where if you want to have Starlink, which is a game changer, you know what
- [35:14]
Becky Quick
it used to take, business folks are
- [35:15]
Andrew Ross Sorkin
going to get on those planes.
- [35:16]
Becky Quick
You had to do backflips.
- [35:17]
Joe Kernan
Even last week I had a. Two weeks ago I had a United flight that I couldn't get the WI FI on this.
- [35:22]
Becky Quick
It just. That said you want Starlink. Yep, yep. Done.
- [35:24]
Joe Kernan
Done.
- [35:24]
Andrew Ross Sorkin
But you have to believe it's more than Starlink.
- [35:26]
Ron Baron
Yes. So Starlink alone, I think, can be worth 14, $15 trillion.
- [35:35]
Andrew Ross Sorkin
Starlink alone as a global player, assuming that these satellites are literally covering the entire globe.
- [35:42]
Ron Baron
So they have 10,000 satellites now. They're on the way to 20,000. They have 9 million customers last year. They have 15 million this year. They're going to grow 50% a year. They can have 300 million customers in 10 years. Then they got Enterprise and they got the government, and there's 8 billion people on the planet. 3 billion don't have the Internet. And a lot of the.
- [36:01]
Andrew Ross Sorkin
Assuming that Kuiper, which of course is the Amazon version of this, you would
- [36:05]
Ron Baron
never bet against Jeff Bezos, but he's going to have a niche. You can't compete with a guy who has all those satellites up there already and all those customers and already serving, and he's going to be like a virtual network. And sooner or later, one of These big telcos is going to sell them access to the city. So he's now got the, he bought spectrum. So there's a lot of services that he can.
- [36:29]
Andrew Ross Sorkin
You think he's going to actually be providing like ground level cellular service as well? And as an integrated product, if you
- [36:37]
Ron Baron
have more than 50% of the people doing business with you on the Internet, you are the Internet. And so he's going to have, I think the opportunity is somewhere around a trillion dollars of annual revenues for him and then maybe making 70, 80% profit margin, 10 years, 12 years, and that could be worth 14, 15 trillion dollars alone, just Starlink.
- [37:07]
Joe Kernan
Is there ever a chance that the government, I mean, you just said he is the Internet. If you're more than 50%, is that ever a chance that it would bring the government in to look at it as monopolistic behavior?
- [37:19]
Ron Baron
Of course. I mean, we live in a very litigious society and people are jealous or upset by. But his goal is always making things better, faster, cheaper. Better, faster, cheaper. Whether it's how many railings you put on platforms that are used in the factories to prevent people from falling off. He looks at purchase orders when he goes to visit office, when he goes to visit factories, looks at purchase orders. Show me the purchase orders. And, and here there's two railings. What do we need the second railing for? And then, and then why do we need these railings on the low platforms instead of only on the high platforms? Nobody's going to hurt if you fall off a low platform. So, so basically every. It's that attention to the culture. Yeah, the culture is low cost as quickly as you can, get the cost as low as you can because everything gets commoditized sooner or later. Competitive advantage now. And you gotta. His advantage is he innovates faster than anyone else. So the culture innovate fast and perform and do things better than other people.
- [38:28]
Joe Kernan
Okay, so two questions. First of all, is Elon Musk the most important person you've ever met in your life?
- [38:34]
Ron Baron
Yes. Yeah. And unusual, for sure. And brilliant for sure. He's got a heart for sure. I really like him. And you know, people, when you asked me before about tying my business so closely to him, is that to hear. My whole life has been since 1970. I come to New York in 1982 and I'm, I'm. I'm living in a basement in 1982 and, and doing chores for my friend's wife. And then 1982, start Bound Capital and I'm an analyst in 1970s and then 1982, you know, not very much, and then, and then a bunch. And now it's going to be, I think, big. And, and, and so, so all these years I build this business and then I push all the chips in the center of the table. And people say, really, is that what you're going to do?
- [39:37]
Joe Kernan
It's your all in moment.
- [39:38]
Ron Baron
All in. And, and, and so I think, so I sort of think analogizing to. I'm not like, like JP Morgan, but he's the guy who financed Rockefeller. And I certainly am not financing Elon Musk, but I'm part of it. And to be tied to the most successful man on the planet, I think it's a good thing. Clearly risky, but that's my game. And I think by next 10 years or so, so risky from the, from
- [40:10]
Joe Kernan
the fact that it's a key man.
- [40:11]
Ron Baron
One person. Yeah, it's one person, but there's 130,000 people there. 150,000, 140,000. He gets the best people and people apply for jobs. I think they hire 30,000 people a year. And they have, you know, 4 million applicants, 3 million, 5 million applicants. People. Everybody wants to work there for one of his companies. They want to be able to, to go into meetings with him and he walks away and he says, you can do this. And he said, we can use. Reuse rockets. Really? You can reuse rockets? Yeah. Not only that, what we're going to do is we're going to land them on a boat offshore initially. You're going to land on a boat, really? And so he'll walk out of the room and Gwen will say, if he says you can do it, you can do it. And then when they look at how much things cost, he knows how much everything costs. And if it doesn't, if he's not being charged the right amount and if they're making too much of a profit, then he's going to do it himself. They're Terrafab. So he needs to have 50 times the number of chips, the number of compute that's available right now, 50 times. So he goes to TSMC and he goes to Samsung and gets the price to get. And nobody's going to be. They got great businesses, so why are they going to take a big risk building a factory? They don't know that he's got this huge demand for. So, so they say, well, I don't know, we can give you the. And, and they, he can't get enough chips. So he's going to build a factory called Terrafab. And he has his whole idea about what he can do. So the chips that we buying from Nvidia, he'll never stop buying them. But the chips he buys from Nvidia, he uses 3% of what Nvidia provides. 3%. So he says, Gee, and they make an 80% profit margin. So gee, I can do that. And I have, I'm a good manufacturer and what I can do is I can, I have ideas and how we can make them faster, cheaper, simpler, and I can do that. And when he does that, he's going to build this facility, he's going to make the chips at a fraction of what's going to cost to make 50 times as many as the whole world is producing.
- [42:10]
Joe Kernan
Yeah, obviously you are a believer and it has done very well for you and your shareholders. Ron, I want to thank you very much for joining us this morning. One quick question before you go. You said it looks like he's leaning towards the Nasdaq for the IPO for SpaceX. Is that based on what you know or is that just based on what you've read?
- [42:28]
Ron Baron
It's based on what Lynn Martin told me. She's the head of New York Stock Exchange. So I don't know, you know, I was disadvantaged coming to talk to you now because I told you before that I wanted to wait until the S1 so I could, could read it, right? So the information. So I have an advantage over other people trying to invest in SpaceX now because I've been investing in it for nine years. So basically I have knowledge I don't have. I don't need to get the knowledge. This thing that is available right now, this, you know, in a quiet period, I've already got the knowledge, right?
- [43:05]
Joe Kernan
Being an investor for so long, right.
- [43:07]
Ron Baron
And so I know what, you know what, I, I have this idea about what it's going to become. So it's Starlink, it's starship, it's compute, AI, it's. Oh, I didn't even terraform. And it's Grok. So can I get two more minutes on Grok?
- [43:21]
Joe Kernan
Probably not too. How about 40 seconds?
- [43:25]
Ron Baron
Grok is like anthropic and so anthropic. Just anthropic invested in compute. And they've done amazing. They've grown from $9 billion of annualized revenues to 40 billion in four or five months, 9 billion to 45 billion. The opportunity is something like 27 trillion a year. And they're at 9, 45 billion. And Grok is the same thing. GROK what Elon thought is what we need is compute. That's the limiting factor. Compute. So he invests in compute. The other guys all invested in software now. They just announced a deal yesterday or the day before, the day before where Anthropic is going to use the compute that we've built in Memphis. We build it cheaper, faster and better than anyone else. Super fast. That's us. Oh, and by the way, so the idea about betting against someone you never bet against, the guy with superpowers who would never give up, that's him.
- [44:22]
Joe Kernan
Ron Baron, thank you very much for being with us today. We appreciate it.
- [44:25]
Ron Baron
Thanks for having me.
- [44:28]
Katie Kramer
We'll be right back.
- [44:29]
Becky Quick
Foreign.
- [44:34]
Keith Lansford
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update where wherever you get your podcasts Parents have you
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- [45:33]
Dan Murphy
What made you confident that you could
- [45:35]
Joe Kernan
do something that hadn't been done before? I have no fear of failure.
- [45:39]
Narrator/Announcer
Trailblazing women, changing the game One of
- [45:42]
Joe Kernan
my favorite pieces of advice Think about what your boss's boss needs.
- [45:47]
Ron Baron
Leadership can look in many, many different forms.
- [45:49]
Mathnasium Advertiser
It really does come down to just trusting yourself.
- [45:52]
Narrator/Announcer
Life is short and you just gotta
- [45:53]
Ron Baron
think big to accomplish big things.
- [45:55]
Narrator/Announcer
Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday. Wherever you get your podcasts.
- [46:06]
Katie Kramer
And that is Squawk Pod for today. Thanks for listening. Squawkbox is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. Get the best of our TV show right into your ears when you follow Squawk Pod. Wherever you get your podcasts, have a great day. We'll meet you right back here tomorrow.
- [46:29]
Ron Baron
We are clear.
- [46:31]
Andrew Ross Sorkin
Thanks guys.
- [46:40]
Schwab Advertiser
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