Starlink Vs Tesla—A Tale Of Two Musks...

Source: Found here

Elon Musk has recently solidified his status as the wealthiest individual in history, with Tesla (TSLA) emerging as his dominant source of wealth. Tesla's market capitalization reached an astounding peak of nearly $1.5 trillion, underscoring its monumental growth. Meanwhile, SpaceX, another Musk-led venture, boasts a market valuation of $350 billion (of which Musk owns 40%). Analysts suggest that SpaceX could eventually surpass Tesla in value, highlighting its transformative potential in the aerospace and telecommunications industries. The story is even more compelling when viewed in the context of what Starlink and global internet can bring to SpaceX.

Tesla's stock performance has been both remarkable and volatile. From January 1 to April 22, 2024, Tesla stock was down 43%. However, between April 22 and December 17, 2024, the stock surged 238% from its lowest point. Following its peak in December, Tesla's value experienced a 21% decline by January 2, 2025, including a sharp 6% drop on that day alone.

This rollercoaster volatility prompts critical questions: At what point does a stock become overvalued? Did Tesla genuinely gain $800 billion (from $700 billion on October 23 to $1.5 trillion on December 17) in market capitalization due to intrinsic growth, or was this surge driven by speculative enthusiasm?

These dynamics raise an interesting possibility: Can investors favor Musk's vision yet prefer one stock over the other? Is it conceivable for Tesla to experience a downturn while SpaceX continues its upward trajectory?

The table below highlights funds with a Tesla weighting of 15% or more, showcasing their exposure and associated risks. Among these, the Baron Partners Fund (BPRTX) stands out with a staggering 44% of its total assets under management (AUM) invested in Tesla—more than double the weight of the next closest non-leveraged, non-international fund. Furthermore, this concentration also comes at a higher cost: the Baron Partners Fund charges the highest fees in the Tesla peer group, with an expense ratio of 2.25%.