Tesla Bull Ron Baron & Education Secretary Linda McMahon 3/11/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Here's what's coming up today on Squawk Pod. Markets in major sell-off mode. Investors worried about the state of the economy and the world's richest losing some zeros on their balances. You know, if you hate billionaires, this is a great day. Legendary investor Ron Barron is our special guest. During volatility, the founder of Barron Funds stays unruffled. It makes people very unsettled right now, all the things that are happening so quickly. I think they're intentional. I think that the government, you had Musk, incredibly consequential person advising the president.

0:40And I think that all the things they say that make the market go up or down. Tesla in particular suffering some major downs, but the longtime Tesla bull is still betting on Elon, despite his focus on Doge. I would hope that he would be a little less visible, but he feels that this is the way he's and get things done. And he's been getting, uncovering unbelievable things. Plus, unwinding bureaucracy in education. Good idea, says the sitting bureaucrat. I think we're going to see improvements in our scores when we get the bureaucracy of the Department of Education out of the way. A conversation with the brand new U.S.

1:17Secretary of Education, Linda McMahon. It's Tuesday, March 11th, 2025. Squawk Pod begins right now. Stand Becky by in 3, 2, 1. Cue it, please. Good morning, everybody, and welcome to Squawk Box right here on CNBC. We're live from the NASDAQ market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. Yesterday was a day of superlatives for the market. None of them, though, were good. The Dow and the S &P 500 had their worst days since December 18th, and believe it or not, They were the relative outperformers. They were down 2 and 2.7 percent respectively. It was the tech stocks, though, that were the biggest losers.

1:59NASDAQ down by 4 percent. That was its worst performance since September of 2022. Apple was the worst performer on the NASDAQ and on the S &P 500, by the way. It's now more than 13 and a half percent from its all time high. The NASDAQ 100 dropped by 3.8 percent and it's now 12 and a half percent from its all time highs. And the fear was palpable yesterday. You just had to look at the VIX to see. The VIX was up by 25 percent at one point. It hit almost 30. That's its highest reading since August. A lot more questions about the prospects for the economy, pressuring both treasuries and oil prices.

2:32If you look at yields this morning, they're down once again. They were down yesterday pretty sharply. The 10-year is now at 4.2 percent. The two-year is at 389. And you had WTI falling to just about$66 a barrel. That's the lowest price since September. Meantime, let's talk about Tesla because it is now falling more than 15 percent in yesterday's market sell-off. Its worst day in more than four years. The stock has lost more than 50 percent of its value since it hit a high in mid-December, a loss of$800 billion in market cap, responding to a post on X highlighting some of the worst days for Tesla's stock since it went public.

3:08Elon Musk said it will be fine long term. In an interview on Fox Business Channel, Musk said that he's running his business with, quote, great difficulty. He may get a little bit of a pick-me-up today, earlier this morning, President Trump posting on his social network, I'm going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American. I thought he had to drive around in the beast. I don't know if he's allowed to drive. Is he allowed to even drive himself? Not when you're president. Not when you're president, right? But some of the Musk's biggest Wall Street backers have been feeling the pain.

3:43Ron Barron's Barron Partners Fund, which counts Tesla as its biggest holding, is down 16 percent this month. And, of course, we're going to be speaking with Ron. It's an interview you do not want to miss. The, yeah, yeah. I mean, the billionaires have been doing well, that's for sure. But at this point, if you want to add up the math on the losses in the Nasdaq, which were substantial. I had a problem calling it a historic loss. The Dow was down 2 % yesterday. In 1987, I was sitting at my desk at EF Hutton, 22.6%. So let's relax. I mean, not minimizing what's happening here, but... No, but if you start to add up the losses, you're now looking at...

4:26No, I know, but nothing's historic. ...down by 8.6%. Nothing is historic. Yeah. Who said historic? Even close. I did. Oh, you did? Oh, okay. Tesla's... Not on purpose. Not on purpose. I didn't catch it quickly. Tesla's, but, you know, if it bleeds, it leads, right? I don't have a problem with it. And the losses have started to build up. No, no, it is concerning. And you never, you get a, are we allowed to say dead cat now? Because we've got rid of the wokeness? Well, I like the cat. Dead rock is still better. There was a time we wouldn't even say dead roach, because some people like roaches. They're very tasty.

5:02They are, and lots of protein. uh... but a dead rock that this the way it's looking here doesn't look like anything that's not a balance now i think it's a way when you're with a mcdc we're not even a good it's a good option would tell you that it still has time to move lower the issue of the air that i'm saying that's not about the other way to tell me so with the defense and the case of the bottom last night last week last week last week is that he said yeah but but he does his crazy short-term call and no one said nobody else would stick their neck out and say no Tesla's 15 percent decline.

5:32Let's talk about how much, you know, if you hate billionaires, this is a great day. Yesterday's decline, making Elon Musk by far the worst performer on the day when it came to loss in net worth. According to the Bloomberg Billionaires Index, his fortune shrank by more than$130 billion, but being able to lose$130 billion. That's what I was thinking yesterday when I saw it. I would love the ability to do that. Remember, Boone Pickens wrote a book, The First Billion's the Hardest, after losing a billion dollars. But the ability to lose money like that and still feel like, yeah, OK, things are pretty great.

6:03How about Oracle? They had results, too. Larry Ellison, Amazon's Jeff Bezos, NVIDIA's Jensen Wang and Dell's Michael Dell all lost more than 20 billion apiece. And this is this year. But there were some winners yesterday. Susquehanna international co-founder Jeff Yas and Berkshire Hathaway's Warren Buffett both added more than 10 billion dollars on paper Jack Ma Bill Gates and Mark Zuckerberg also and the house is expected to vote this afternoon on a continuing resolution to fund the government that's ahead of a possible shutdown at the end of the week if lawmakers can't get a deal and the house rules committee voting yesterday to advance the six-month funding package house speaker Mike Mike Johnson telling reporters he feels good about it passing.

6:53Sources also tell NBC News President Trump and top aides have been calling undecided Republicans and urging them to support the continuing resolution. But at a press conference yesterday, House Minority Leader Hakeem Jeffries instructed the board collective of House Democrats to not support the bill. But we'll see. The Republican bill dramatically cuts health care, nutritional assistance for children and families and veterans benefits. It is not something we could ever support. House Democrats will not be complicit in the Republican effort to hurt the American people. people. Because there are about 12 Senate Democrats or about 12 Democrats that we're talking about in Trump areas that might actually vote for this because you could be accused of, you know, normally the Democrats love to say the Republicans love to shut the government down.

7:52This time they could be opening themselves up to that charge. Senate Democrats are also largely condemning it. Two Democratic lawmakers did introduce their own funding bill that would keep the lights on in dc through april 11th uh it could serve as a backup if the gop uh bill failed i will say uh yesterday morning we were tired because daylight savings time man did i appreciate the light last night because it was 65 degrees we were outside with the kids late i know life is back i had a similar experience yeah yeah going going to the upper east side to get a haircut But there was no traffic. I love this congestion pricing.

8:36I know. It's really a good idea. Why not? Do I not like the lanes, the fast lanes? But you know who I feel like? An entitled, privileged, one percenter. I've got enough to pay for the congestion pricing and for the fast lanes. But everybody else, all the little people, I mean, I feel horrible. I feel horrible that I like congestion. I don't? I feel horrible that I don't like congestion. That's not even the way to think about it, by the way. You're going to tell me. You always tell me how to think about things, and it's always wrong. No. Go ahead. Then I won't. Then I won't. Okay, please. Please give me.

9:17Part of the problem for those in New York City, which you need to get people to move around in the city. Right now, the problem with the congestion actually reduces productivity because people cannot move around. Trucks can't move around. Stuff can't get delivered. Because they could pay it. What did you say? They can pay it. What are you talking about? No, he meant before congestion pricing. Before congestion pricing, we had an actual problem in this city. Plus, we had a revenue problem. And by the way, as a result, less people were going on the subway. And that meant that people weren't getting around.

9:48I have ADHD. So you like congestion pricing or you don't like it? Oh, yes, I like it. But you don't feel like a fat cat? No, I feel, no. Well, you feel like you're helping everyone. Ultimately, actually, I do. I know this may sound crazy to you, but ultimately, I do. I felt guilty. I don't feel guilty because I hope that we're going to make the subway system better. Yeah. She feels guilty. Okay, well, then. I like it, but I feel guilty about it. We were buzzing right up to Madison Avenue. All right. Enough on our congestion pricing. Cheese will be next. Coming up next on Squawk Pod, the great stock decline of Tesla.

10:26Down 15 % in a day. Down 45 % in 2025 so far. Down more than that since President Trump took office in January. But Tesla's longtime bull and shareholder is still bullish. Investor Ron Barron maps out the EV self-driving Musk-driven future. I think that over the next 10 years in SpaceX, we can make 10 times. Elon thinks we're going to make 30 times. In Tesla, I think we're going to make from where it was a trillion one. I was thinking we would make four times over the next 10 years. I think we're going to make more than that now from these prices. Tesla makes up 32 % of one of Barron's funds. And that fund is down more than 16 % in the last month.

11:09Plus, we'll get the Musk backers' advice on CEOs in politics right after this.

11:20You're listening to Squawk Pod from CNBC. Here's Becky Quick. All right, welcome back, everybody. Tesla is coming off its worst trading day since 2020, falling 15 % in yesterday's session. That stock is down now more than 50 % from its all-time high that was reached in December. Still, if you're looking for the last year, it's up 25%, so it has been a pretty volatile stock. Joining us right now is longtime Tesla bull, Ron Barron. He is Barron Capital's chairman and CEO. He's been, again, a longtime investor, not just in Tesla, but in many other Elon Musk companies. And Ron, thanks for coming in today.

11:55Thanks for inviting me. Let me ask you very quickly right now how you're feeling about the overall markets. You're a value investor when stocks come down, prices come down. Sometimes value investors get pretty excited. How do you feel about things? It makes people very unsettled right now, all the things that are happening so quickly. I think they're intentional. I think that the government, you had Musk, incredibly consequential person, advising the president. And I think that all the things they say that make the market go up or down, you shouldn't think that those are by miscommunication or error.

12:33They're all intentional. Not intentional to drive the stock market down, to get to a different place for the economy. Well, everything. I think it might even be intentional to try to slow down the economy, get rid of inflation. First term president, the first thing you do is try to do things that are going to be unattractive to your constituents. You know, if you're running for election, but you do it now, get it out of the way. And then a year and a half from now, then things will look better. A year from now, things will look better. But stock prices, I've been saying for a little while now, I can't believe how cheap they are.

13:05But the things that we're looking at. So you're on a buying spree right now? I didn't say I was in a buying spree. I just said, I can't believe how cheap things. I own a lot of things. I'm a long-term investor. You know, it's interesting. I listened to your analyst this morning on television, and you were talking to him about Tesla. Gene Munster. Gene Munster. And you were asking him, great shirts he has all the time, I guess. But you were asking him about what he thought about Tesla. And he said, well, for a four-week horizon, a four-week horizon. So that was his mindset, a four-week horizon.

13:37I think he did say for four weeks, you could see some volatility, but longer term, he was a fan. If you're a trader, I would not own them for the next month until they report that. Which means you'd sell them? Is that what you're saying? You'd sell them? Yeah, well, I would not own them. The trick in selling them, if you're a trader, yeah, I would sell it for if you want to play it like week to week. All the pain that we're having in 2025 does set up 26 for a gain, and that's why I continue to own the stock personally. Yeah, but I mean, it's focusing on four weeks. And basically, I met Elon in 2010, and it took me four years before I invested anything.

14:16And between 2014 and 2016, invested$400 million, and we made$6-7 billion on that. And then we invested in SpaceX in 2017 on, at a billion one, that's now worth about$4.5 billion. I think that over the next 10 years in SpaceX, we can make 10 times. Elon thinks we're going to make 30 times. In Tesla, I think we're going to make from where it was a trillion one. I was thinking we would make four times over the next 10 years. I think we're going to make more than that now from these prices. Ron, so there's two issues, I think, going on with Tesla right now. I'm curious where you land. There's the fundamental issue, which is just what's happening in the economy.

14:58How many people are going to buy cars, at least the products that we know about today, right? When you think robo-taxis develop, when you think new cars come out, all of that kind of stuff. That's the actual fundamentals of the business. And then there's the multiple question, which is really a market psychology question to some degree. I mean, they're related, hopefully. But as I look at it, it's sort of two issues. There's multiple, which multiples are coming down in everything. But then there's the actual fundamentals of the business. So you're thinking a year out, it's a lot better. And my question to you is, what happens in a year from now to the fundamentals of the business?

15:32Meaning, are they selling more cars? Do you think that they're going to launch new models that we're going to see? Do you think the Robotaxi product actually does launch in a – and it's material to the business during that period? What's the sort of catalyst?

15:49So fundamentals. So I want to get one thing straight, though, first of all, that we're investors in people for the long term. Question everything. Don't take anything. We're investing for the long term. Exceptional takes time. We look out years. Own it. We own things. We don't buy and sell things. And as far as the fundamentals go, so I want to make sure we talk about other people, too, other than Elon. I'm not talking about Elon. I'm talking about the business. A major guy. So his business, you wouldn't have a business without him. You wouldn't have EVs without him. You wouldn't have autonomous driving without him.

16:23You wouldn't have the Internet for every inch of the planet without him. You wouldn't have rockets that you can use without him. I'm an unbelievable engineer. And the fundamentals of the business, this is an inflection point right now. The last time I was on, the stock price was$160. And I was telling you that I thought that this was a really interesting time to buy because the robo you know the software was working way more when they have cars uh you have to have 150 200 000 car our car is uh you know 35 000 car and it's software it's software and cameras and so it's going to drive just like a person and uh and probably better way better than a person each each new uh series of uh you know in constructions is dramatically better than the last one so fundamentals the changes is that so historically what we did is we what tesla did is they built a facility in china they bought this junky place that bank that was bankrupted by toyota and uh and gf general motors in california and all the union workers were fired hear that joe biden all the union workers were fired and then every single one lost their jobs and then we take over this plant and they go look at it for the first time after he buys this thing for distressed price they spent a billion dollars on it it cost us 20 or 30 million dollars to buy it and then uh they They go to see it and Elon says, yeah, let's go look at this place we bought.

17:43And it's a huge facility, five million square feet. And they can't get into it. They finally get inside and they go with one of his friends from college as a director. And they open the door and they look inside. And it's dark and dismal and it's drugs and prostitution. And, you know, it's crazy stuff inside of that place. And they look around and it's incredibly dark. And Elon's looking around and he says, well, what we're going to do is we take off the roof here. We're going to make it all white and we have the production line running there. And so they learn how to build it. And it was making four or five hundred thousand cars a year, six hundred thousand cars.

18:17Then they go out and they build a facility in Shanghai and it cost them seven billion dollars to build it for a million cars. And that factory was making fifteen thousand dollars in profit a car, investing seven billion, making fifteen billion dollars a year. And then price cut after price cut after price cut. Chinese are incredible competitors. I don't understand how American car companies will survive, except for Tesla. And so I'm going too long. But, Ron, let me just ask. Anyway, the fundamentals are changing. Instead of making$5 ,000 or$6 ,000 or$7 ,000 a car, you're going to robo cars. And every time they have a million cars that they make, that they keep, that are$30 ,000 a piece that last a million miles, those cars are going to generate 50 ,000 revenue miles a year.

19:01So before the model was they're making$7 ,000 in profit a car,$6 ,000 in profit a car, a million eight cars. Now all of a sudden you're keeping the cars and making them robo taxis. What that means is that if you do 50 ,000 miles a year for a car, those cars will generate 50 ,000 revenue miles. They'll generate$30 ,000 or$40 ,000 or$50 ,000 in profit per year, per car. So every time you have a million cars, you're adding 30 or 40 or 50 billion dollars to 30 or 40 or 50 billion dollars to profits per year for a million cars. You have been a longtime believer in Tesla, a longtime believer in Elon Musk, and you've been right.

19:40The numbers that you've kind of come on here and talked about, we've headed a trillion dollars and over. The market cap is now back at$715 billion, but market cap was above a trillion dollars. You had said two trillion when people thought it was crazy. It doesn't look so crazy anymore. A lot of the things you've said have all happened, and it's because you've been a believer in Elon Musk. I would add that there's a third consideration in the stock market right now, though, too, and that's that Elon Musk has gotten so associated with Donald Trump and with Republicans and with Make America Great Again that it has led to blowback in some areas.

20:15In Europe, sales are down 45 percent in some areas. There have been cases of vandalism, even terrorism, against the cyber trucks, against Tesla cars, against some of the factories that are out there. That's a pushback. And I think of Warren Buffett, who used to say that just because he is the CEO, that doesn't mean he has to check his political beliefs at the door. That's what he always said, and he was always pretty outspoken on things. But several years ago, many years ago, he changed his mind on that and said he was going to keep his political beliefs a little more to himself because he didn't want the impact of people who disagreed with him to come back on Berkshire.

20:51Do you think that this is helpful to the stock with what he's doing right now? Do you think it concerns, does it concern you that he's spending more time at Doge than he is at Tesla?

21:03So, so my advice has always been to avoid politics. I don't like talking to you guys about politics. I don't think corporate executives, I don't think that's the best use. But he believes this is really important for our country. So remember, ChatGBT, that was founded by him. Yeah. And he put up the money for it in a nonprofit organization. That's worth$350 billion. He walked away from that because he wasn't convinced. In fact, he was convinced the opposite, that this was going to be bad for humanity. Humanity. He was working about humanity. So he gave up his interest in ChatGPT, although they offered it to him again.

21:43But he does not care for the person who's running it, Sam Altman. So he doesn't trust him. So basically, I don't think it's a great thing to alienate half the population. On the other hand, he believes that digitization and autonomy is going to be driving the future. and he thinks we're going to have, we're on the verge of having an era of incredible abundance. Incredible abundance. So he's setting it up for that. And then in addition to that, what he believes is that in order for the planet Earth to survive, that America has to be militarily strong. And the only way you can be militarily strong is you have to be, you can't be financially weak.

22:26So what he's trying to do is set it up so that you'll be financially strong and then you can be militarily strong, and that's going to protect the planet, he believes. And I agree with that. So I think there's, you know, I would hope that he would be a little less visible, but he feels that this is the way he's going to get things done, and he's been getting, he's uncovering unbelievable things and I think will be successful. How often should you expect SpaceX to have these issues? And you see the celebration from the Elon haters. It's sick. but they actually chortle and sort of laugh about the two recent incidents.

23:07Elon, he's right. Rockets are hard. But this is all, there was a time in Elon's life where he would have, if a launch had failed, he would have been bankrupt. I think he's recounted that story before. Three different times. Yeah, so this happens. Sleeping on the floors. Are things going along fine with SpaceX? I ask about that regularly. I ask about succession. I ask about how the management is going and whether he's showing up. And he is showing up. I mean, unbelievable that he's doing all the things he has in Washington. And I was talking with someone who is a financial executive at SpaceX, I guess, last week.

23:46And she was telling me that when there's an issue with something like Starship, which isn't working yet, but making incredible progress, there might be three meetings a week. He's in every one of the meetings. and then when it's a Falcon that's doing great so he's there for a short time and if it's a you know you know Starlink or or a star you know defending of our country he's there for those meetings too but he's there all the time I said so so you're a financial person what are you doing there and so she says well what we do is we give him a deck and he goes through the deck presumably but maybe he doesn't because maybe he knows all this stuff already and we ask questions so why are you in this meeting you're a financial person well i'm there because we give him the options this is what this is going to be this is one solution and she says i'm the one who figures out how much everything's going to cost he shows up at all these meetings and everyone tells me the same thing he is more charged up about his business now than he's ever been and all these new when you talk about the fundamentals there are all these new products that are coming out right now right now the middle of the year you're gonna start seeing new products new refreshes when you talk about Europe sales being down 40 50 percent that's it on how many cars they're not making them they're not making them because they're going from the model Y which is the best-selling car on the planet a million two cars a year to not making them and so how are you gonna have up up sales when the cars that's driving your your your business isn't being made and so that's what's happening and you're starting to make them now in the refresh model and as you see pictures of people saying man this is a great incredible car and then in addition to how you talk about full self-driving man you won't believe what this is like i mean you have to so joe you like porsches or something go get one of these cars get it i'll get you a test drive i will have a tie can i will do that we have tie can no no no no no i do not okay i will have a car brought me to get an ev i want you what an x you want an x i like a plaid like the x we get to play get the plaid um you know s and uh i do like those i want a black one if you really if you're offering i'm not offering it to you but but i will have you get a test ride and the way they get the most sales is they get people have test right you know it's really funny that i had a battery in my key that wore out and so we're in florida i have one in florida and so uh so judy says uh well you got change that I'm not gonna change it why don't we have someone else do that for me now we're gonna change it so we call up in West Palm Beach I do that yeah call up in West Palm Beach to drive over there and then as we go in there's two young men sitting behind computers and and one of them says Ron Baron you're Ron Baron wow can I have a selfie with you sure and then he does that and then the person actually says you're on Baron wow I got to call my manager and the manager comes over and he says Ron you changed my life you've changed my life Why?

26:47I say, well, because I talked to you seven years ago, and you convinced me that this was a great place that I should be working. And in fact, most people who are in my business, what they do is that their goal in life is to make as much money as they can, as fast as they can, so they don't have to do it anymore, and they can do something else. That's what they want to do. They make as much money as they can, as quickly as they can. And what our goal has been is to change people's lives, change the people's lives of people who work with us, and change our clients' lives. Changing lives, that's our mission.