Tesla investor Ron Baron told CNBC on Monday that he is not surprised at the electric carmaker’s bitcoin purchase, but he warned he wants to further investigate the decision-making process before making a judgment.
Tesla announced in a filing with the Securities and Exchange Commission on Monday that it has purchased $ 1.5 billion worth of bitcoin and plans to start accepting the cryptocurrency as payment for its products.
Tesla CEO Elon Musk “has been responding positively to bitcoin for a while, so the announcement regarding bitcoin [is] not surprising, ”Baron told Becky Quick, co-presenter of“ Squawk Box ”.
Baron has been optimistic about Tesla for years and his eponymous investment company, Baron Capital, has a significant stake in the electric vehicle manufacturer.
“I’m sure there has been a lot of thought about Tesla’s bitcoin purchase and I look forward to learning the rationale,” added the billionaire investor in his comments to Quick, who she read on the air.
Bitcoin’s price soared to a new all-time high on Monday after the Tesla purchase went public, surpassing more than $ 44,000 per coin at one point.
Tesla’s shares were up more than 1% at the start of Monday’s trading session. The stock was in a crack for the past 12 months, climbing nearly 470% from Friday’s closing price of $ 852.23.
Bitcoin’s sharp rise in price over the past year coincided with numerous high-profile investors touting the cryptocurrency. For example, Paul Tudor Jones has said he believes bitcoin is a strong hedge against inflation. Established fintech firms such as PayPal have also made their way into the crypto space, and some believe that institutional adoption has been a factor in bitcoin’s rally.
In his comments to CNBC, Baron pointed to the moves of “serious investors” like Jones and companies like PayPal, saying he should have previously recognized them as possible precursors to greater bitcoin adoption.
Baron also named Ark Invest founder and CEO Cathie Wood, a fellow Tesla uber bull, as a bitcoin supporter. Wood’s company is also a major shareholder of Tesla. It has a target price of $ 7,000 per share for the electric car manufacturer to meet by the end of 2024. In February 2018, Wood boldly predicted that Tesla stock would go to $ 4,000 each. On a split-adjusted basis, that forecast came out last month.
In June, Baron told CNBC he believed “there is 10 times more to go” on the upside of Tesla stock. Since then, shares have exploded, making nearly half of those gains in less than eight months. Tesla executed a 5 for 1 stock split in August. The shares have since taken off like a rocket. In October, Baron said he believed Tesla would eventually become a $ 2 trillion company. As of Monday, Tesla’s market cap was just over $ 800 billion.