Latest / The Bear Market Podcast with Fexingo: Surviving Downturns, Buying the Dip, and Long-Term Resilience / How Ron Baron's SpaceX Bet Redefines IPO Investing
Transcript
- Lucas: So Ron Baron bought another billion dollars of SpaceX stock in the IPO. That brings his total stake to 25 billion dollars. And I think that number — 25 billion — tells a much bigger story than just one rich guy doubling down. Luna: Twenty-five billion is a staggering number. But isn't Baron known for holding things forever? Like, he held Tesla through some brutal drawdowns. Lucas: Exactly. He's famous for saying his average holding period is like 12 years. And with SpaceX, he's been in since 2017, I think. So this isn't a flip. It's a conviction bet that SpaceX becomes the dominant space company for decades. Luna: But the IPO story for retail investors this week was pretty different. Lots of people couldn't get shares, or got tiny allocations. And the stock popped immediately. Lucas: Right. First-day pops are the norm for hyped IPOs. But what's interesting here is the post ipo drift. Most retail investors who got in at the IPO price — if they got any — had a decision: sell the pop or hold. Baron held. He actually bought more. That's the starkest contrast between a long-term allocator and the typical retail play. Luna: And the typical retail play is usually sell, take the quick gain, and move on. Especially in a market like this where we've had a strong week — S&P at 7,569, Nasdaq at 26,636, VIX down to 16. Lucas: Yeah, the VIX at 16 is a world away from where it was a month ago. Market's relaxed. But that calm can make people impatient. You see a 30 percent IPO pop and you want to lock it in. Baron's view is the opposite — he's thinking about where SpaceX is in 2035. Luna: Which raises the question: should regular investors even try to play IPOs? Or is it mostly a game for institutions and insiders? Lucas: I think the data says: if you can get an allocation at the IPO price, statistically, holding for a year tends to underperform just buying the index. But that's averages. The real skill is identifying which IPOs have that long-run compounder quality. Baron clearly thinks SpaceX is one. He's putting 25 billion dollars behind that view. Luna: And he's been right on Tesla. But Tesla was a public company for years before it really took off. SpaceX is still private company like in its growth stage, even post ipo. Lucas: That's the key nuance. SpaceX is now public, but it's not a typical public company. It's still founder-led, still heavily investing, still not profitable on a GAAP basis probably. The IPO was more about providing liquidity for employees and early investors than about raising capital. Baron buying in the IPO is him saying 'I want more exposure to this specific long-duration asset.' Luna: So for the listener who's thinking 'should I buy SpaceX stock today at the market price?' — what would you say? Lucas: I'd say: you're buying a story, not a valuation. SpaceX is valued at something like 250 billion after the IPO. That's a huge number for a company that, last I checked, had maybe 10 billion in revenue. The valuation implies massive future cash flows from Starlink, from launch services, from Mars missions maybe. If you believe that future, then today's price might look cheap in 10 years. But there's a lot that has to go right. Luna: And that's where Baron's edge is. He can afford to be wrong for years. Most retail investors can't stomach a 50 percent drawdown on a single stock. Lucas: Exactly. His fund's time horizon is genuinely long. Most of us have shorter horizons because of life — mortgages, tuition, retirement timelines. So copying Baron's trade without his time horizon is dangerous. Luna: So what's the takeaway for someone who missed the IPO? Should they just forget about SpaceX and buy the S&P? Lucas: Not necessarily. But I'd say: if you want to own SpaceX, treat it like a venture allocation. Keep it to a small percentage of your portfolio — maybe 2 or 3 percent — and be prepared to hold for a decade. Don't check the price every day. And definitely don't buy it because it popped on day one. Luna: That's good discipline. And it's the opposite of what most IPO coverage encourages. Lucas: Look, the market this week is telling us something. The Russell 2000 is up 4 percent in five days. Small caps are finally getting some love. And the yield curve is positively sloped — 10-year at 4.45, 2-year at 4.05. That's a healthy setup for risk assets. But it doesn't mean every IPO is a buy. Luna: And the VIX at 16 says complacency is creeping back in. That's when big moves happen. Lucas: Right. So back to Baron. He's essentially making a concentrated bet that SpaceX will be one of the defining companies of the next 20 years. If he's right, his 25 billion becomes 100 billion. If he's wrong, it's a costly mistake but not a fatal one for his fund. For retail, a mistake on a concentrated position can be fatal. Luna: So the lesson isn't 'buy what Baron buys.' It's 'think like Baron thinks.' Lucas: Bingo. Have a thesis. Have a time horizon. Size accordingly. And don't let the day-one pop fool you into thinking you've missed the boat. SpaceX will have volatile years ahead. There will be other entry points. Luna: And if you want to support our show, which is ad-free and listener-funded, you can find us at buy me a coffee dot com slash fexingo. That's what keeps us doing deep dives like this without commercial breaks. Lucas: Yeah, it's a small group of listeners who chip in, and it genuinely makes a difference. No pressure, but if our money conversations have helped you think about a decision differently, that's the link. Luna: Exactly. So back to the market — we've got the S&P at 7,569, the Dow at 51,905, and the Nasdaq at 26,636. All up on the week. But the real action is in small caps. The Russell is up 4 percent in five days. That rotation out of mega-cap tech into value and cyclicals is something we've been talking about for weeks. Lucas: And it's accelerating. The 10-year yield dropping from 4.55 to 4.45 helped. Lower rates are a tailwind for smaller companies that carry more debt. Plus, the GDP growth print for Q1 2026 came in at 1.6 percent annualized — up from 0.5 percent in the prior quarter. That's not boom times, but it's stabilization. Luna: So the macro backdrop is actually supportive for the Baron-style long-term bet. Rates coming down, growth stabilizing, risk appetite returning. Lucas: Right. But a supportive backdrop doesn't guarantee success for any single company. SpaceX still has to execute. Starlink needs to keep adding subscribers. Starship needs to reach orbit reliably. The Mars timeline is uncertain — some prediction markets say not this decade. Luna: Which brings us back to the core theme of this podcast: surviving downturns, buying the dip, and long-term resilience. Baron is basically buying the dip on a company that just IPO'd. But his 'dip' is measured in years, not days. Lucas: Exactly. And that's a mindset shift most investors never make. They look at a stock that's down 10 percent in a month and think 'dip.' Baron looks at a company that's up 10x from his entry and thinks 'still early.' Luna: That's a good note to end on. Thanks, Lucas. Lucas: Thanks, Luna. Talk to everyone next time.