Billionaire Investor Ron Baron Has Already Made at Least a 1,312% Return on His Fund's Investment in SpaceX. Here's What He Thinks the Stock Will Be Worth in 10 to 15 Years

Elon Musk has made many shareholders, from retail to institutional, a lot of money over the years, looking back at all of the companies he's founded, sold, and taken public.

But few have benefited from Musk's entrepreneurship more than billionaire Ron Baron, who has run his own fund, Baron Capital, since 1982. Baron's fund launched with just $10 million in capital and today is valued at nearly $56 billion.

Baron Capital invested in SpaceX when it was still private in 2017 and has likely already generated a massive return of roughly 1,312% since then. Here's what Baron believes SpaceX will be worth over the next 10 to 15 years.

Image source: The Motley Fool.

Belief in Elon

Baron is one of Musk's biggest advocates.

He invested $400 million in Tesla, Musk's electric vehicle company, which is now in the robotaxi and robotics business, between 2014 and 2016, and has since made $8 billion in profits.

Baron also started investing in SpaceX when it was private in 2017, and built a $1.7 billion stake.

That number has ballooned to $15 billion based on the valuation in the private markets. But assuming SpaceX is successful in raising at least $70 billion in its initial public offering, Baron Capital's position would be worth $24 billion at the time of the IPO.

In its IPO, SpaceX reportedly sought to raise $75 billion at a $1.78 trillion valuation, with the option to sell the underwriters an additional $11.2 billion worth of shares.

Media outlets have reported that SpaceX's IPO is over two times subscribed, meaning it has seen demand of $150 billion. It's not uncommon for a high-profile IPO to be many times oversubscribed, but given that SpaceX is the largest IPO ever and the magnitude of the raise, it's still quite impressive.

What Baron thinks it will be worth in 10 to 15 years

In a letter to investors in late April, Baron said he thinks the stock will soar over the next 10 to 15 years on the public markets, and he reiterated those beliefs during a CNBC interview in May.

"This is going to become the largest company on the planet," Baron said. "... 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."

Baron is bullish on SpaceX for a few reasons.

For one, due to new fast-entry rules and the waiving of profitability requirements, many indexes will be able to include SpaceX within its first few weeks of trading. That means every index fund or exchange-traded fund (ETF) that tracks an index that includes it must purchase SpaceX stock.

This will help absorb a sizable portion of the current float, and could offset some of the selling pressure, as insiders and company employees begin to sell their shares.

Baron is also extremely bullish on SpaceX's prospects for putting data centers in space. In its registration statement, SpaceX said it could begin putting data centers in space as early as 2028.

Baron believes space will be the best place for data centers because people on Earth don't want them located near where they live, due to high electricity costs and water usage needed to cool the chips in the data centers.

But in space, there would be less of a need for water because it is much colder, although Baron pointed out you would still need giant radiators. Furthermore, electricity is less of a concern because SpaceX could theoretically generate much more solar power by being closer to the sun and avoiding cloud cover.

Should investors buy the Baron hype?

Investors should be careful about reading too much into any grandiose statements from hedge fund managers. While Baron is a legendary investor who has done incredibly well on SpaceX, he also got in at a much lower price and is on television talking about his book.

It could also take SpaceX quite a while to deploy data centers in space. It is still exploratory, and who knows how much it might cost. Musk is also known for being early in predicting when he will roll out his many ingenious innovations.

For instance, Musk in 2017 said there would be fully self-driving cars on the road by 2019. Seven years later, and it still seems as if Tesla and other companies are trying to perfect the technology.

SpaceX could be a great investment for long-term investors, and it could even be as good as Baron says. But I still see no need to rush into an IPO with so much hype, especially since it's only selling a very small percentage of the public float to begin with.

I think investors would be well served to wait and keep an eye on SpaceX over the next six months. After it has already been added to all the indexes and all lock-up provisions have expired, allowing insiders and company employees to sell their shares, investors should revisit the stock and see where things stand.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.