What if Nvidia's Jensen Huang had the same deal as Elon Musk, or if Musk had the same deal as Huang? That is, what if the two men owned the same percentage of the company they founded and those companies had the same P/E ratio? The apples to apples comparison is kind of stunning.
The inputs
Nvidia earned $192.88B on a ~$5.4T market cap, a trailing P/E of about 28. Tesla sits at 345x P/E on roughly $4B of earnings. Musk holds ~20% of Tesla and ~38% of SpaceX, which blends to about 30.6% weighted by value. Huang holds roughly 3.5% of Nvidia.
Extreme A — everyone gets Musk's ratios
Musk is already there, so he's unchanged at about $930 billion. (By Forbes' calculations, Musk has been the world's first trillionaire, a milestone he briefly crossed after SpaceX went public.)
Nvidia at Tesla's 345x: $192.88B × 380.61 = $66 trillion. That single company would exceed the entire US stock market by a comfortable margin and be roughly half of world GDP.
Huang at Musk's 30.6% of that: About $20 trillion. That is, Huang would have a net worth roughly equal to China's GDP, and greater than every country on earth except the US.
Extreme B — everyone gets Huang's ratios
Huang is already there, so he's unchanged at roughly $190 billion.
Tesla at 27.5x P/E: about $110B. SpaceX has no earnings, so using Nvidia's price-to-sales of 17.4x on $23B revenue gives about $400B. Combined, Elon's two companies would be valued at roughly $510B if they were priced relative to sales or earnings at similar level as Nvidia.
Musk at Huang's 3.5%: $18 billion.
| Musk | Huang | |
|---|---|---|
| Musk's rules | $930B | $22.5T |
| Huang's rules | $18B | $190B |
| Actual today | ~$930B | ~$190B |
The punchline
Huang wins both extremes. Under Musk's generous rules he's worth 24 times Musk. Under his own stingy rules he's still worth more than ten times Musk. There is no symmetric treatment — same multiple, same ownership share — under which Musk comes out ahead.
Which means Musk's position as the world's wealthiest person doesn't survive equal treatment in either direction. It exists entirely because the two men are being scored by different rules simultaneously: Musk gets a triple-digit multiple on negligible earnings and a thirty-percent ownership stake, while Huang gets a twenty-seven-times multiple on colossal earnings and a three-percent stake. Take either advantage away and the ranking inverts. Take both and it inverts by an order of magnitude.
I recently heard a couple of guys who short stocks on Steve Eisman's podcast. Eisman asked them about their experience at shorting Tesla, which seemed to them clearly overvalued. The one guy quipped, "We learned that you never short a cult." It is, indeed, a curious set of beliefs that sustain Elon's net worth.
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