Musk Backs Trump’s Campaign: A Financial Perspective
Musk’s recent support for Donald Trump in the upcoming 2024 presidential race has raised eyebrows, particularly in light of his past political affiliations.
From Democrat Supporter to Trump’s Advocate
Historically, Musk was an advocate for Democratic candidates, having voted for Barack Obama in both 2008 and 2012, and Hillary Clinton in 2016. In recent years, however, he has shifted his focus to Trump’s quest to reclaim the Oval Office.
Financial Motivations Behind the Shift
While some may interpret Musk’s endorsement as a political move, a deeper look reveals a connection to his financial interests. His loyalty to Trump, coupled with criticism of Vice President Kamala Harris, correlates closely with the performance of Tesla Inc. TSLA.
Comparing Tesla’s Performance: Trump vs. Biden
To grasp Musk’s motivations, one must consider Tesla’s stock movements under both administrations. During Trump’s presidency, which lasted from November 2016 to November 2020, Tesla’s stock skyrocketed by an incredible 987%, providing an annualized return of about 84%.
This remarkable surge increased Musk’s net worth significantly, from $8 billion in 2016 to $107 billion by the end of Trump’s term, according to the Bloomberg Billionaires Index.
In stark contrast, Tesla’s growth under Joe Biden’s presidency has been more muted. Since November 2020, the shares have only risen by approximately 86.5%, translating to an annualized growth of about 16.2%.
While that figure remains commendable, it dramatically lags behind Musk’s gains during Trump’s rule. As of November 2024, Musk’s net worth is around $262 billion, but the pace of growth has considerably slowed.
Musk’s Wealth Tied to Tesla
Given that Musk owns 22.3% of Tesla’s 3.21 billion outstanding shares, his wealth is now closely linked to the company’s stock performance. Reports from the Economic Times state that roughly three-quarters of Musk’s wealth is tied directly to Tesla shares.
| Metric | Trump Presidency (Nov. 2016 – Nov. 2020) | Biden Presidency (Nov. 2020 – Nov. 2024) |
|---|---|---|
| Tesla Stock Price Increase | +987% | +86.5% |
| Annualized Return | ~84% | ~16.2% |
| Musk’s Net Worth (Start) | $8 billion | $107 billion |
| Musk’s Net Worth (End) | $107 billion | $262 billion |
| Net Worth Growth | 13-fold increase | 2.5-fold increase |
The Rise of Nvidia and Competitive Wealth
While Tesla’s exponential growth has tapered off, Nvidia has surged under Biden, pushing Jensen Huang, CEO of NVIDIA Corp NVDA, into the spotlight as a formidable contender for the title of the world’s richest person.
Nvidia’s shares have increased by 958% during Biden’s presidency, mirroring Tesla’s earlier performance. Huang’s wealth ascended from $11.8 billion in November 2020 to $118 billion by November 2024, a nearly 10-fold increase akin to Musk’s rise during the Trump administration.
Though Huang currently ranks 11th on the Bloomberg Billionaires Index, he is closing in on Musk’s wealth. Should Nvidia’s shares continue to climb, the gap may diminish, particularly if Tesla’s stock stagnates.
Looking Ahead: Musk’s Financial Strategy
Musk witnessing the swift growth of Nvidia could underscore a potential need for a return to Trump-era policies he perceives as more conducive to fostering business and enhancing his wealth.
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