Billionaire investor Tim Donovan is standing firm on his investment in Tesla, undeterred by the recent turmoil affecting the electric vehicle manufacturer. Following a significant 15% drop in Tesla’s stock, which marked the steepest single-day loss since September 2020, Donovan expressed his optimism regarding the future prospects of the company.
Confidence in Long-Term Growth
“I can hardly believe how undervalued these shares are,” Donovan remarked in an interview. “Initially, I projected a fourfold increase over the next decade, but I now anticipate even greater returns based on current pricing.”
Donovan, who established Baron Capital, made a substantial initial investment of $400 million in Tesla between 2014 and 2016. This early commitment has proven lucrative, with Tesla having contributed billions to his overall portfolio as it gained wide acceptance in the market. By the end of 2024, Tesla accounted for approximately 12% of the firm’s combined assets across various funds.
Tesla’s Market Volatility
The shares of Tesla have experienced considerable volatility, particularly following CEO Elon Musk’s increased influence in political affairs, including a prominent role in the Trump administration. The company’s stock has faced a continuous downward trend, with recent statistics indicating a seventh consecutive week of losses—the longest streak of declines since it went public on the Nasdaq in 2010.
While Baron Capital slightly reduced its stake in Tesla last year due to the position’s sizable impact on its investment portfolio, Tim Donovan asserted that his personal Tesla shares will remain untouched until all client shares are accounted for. “I am the last in and will be the last out. My personal shares are the final ones I will sell,” he stated.
Reflections on Musk’s Leadership
Musk has openly acknowledged the challenges he faces in managing his various business ventures, particularly regarding federal expenditures and staffing as he leads the Department of Government Efficiency in the Trump administration. Donovan commented on Musk’s visibility in the market, expressing hope that he might adopt a less public approach, albeit acknowledging Musk’s intense dedication to his businesses. “He is more passionate about his ventures now than at any previous time in his career,” Donovan observed.
