Forget the Ford vs. Chevy battle. And Coke vs. Pepsi is so 80s. Now the colossal corporate battle is between entrepreneurial titans Elon Musk vs. Jack Dorsey.
Both CEOs founded several influential companies: Musk founded Tesla and Dorsey online payments company Block. But their worlds are colliding over Twitter, the S&P 500 company Dorsey cofounded and Musk tried to buy for $44 billion until changing his mind. Musk's attorneys subpoenaed Dorsey as part of the legal battle to end the deal, The Wall Street Journal reported.
But is Musk or Dorsey the better CEO for investors? An Investor's Business Daily analysis using data from S&P Global Market Intelligence and MarketSmith sizes the two leaders up. And Musk has the edge in nearly all respects.
Sizing Up Musk's Tesla Vs. Dorsey's Block Stocks
Most Tesla and Block investors couldn't care less about the drama at Twitter. What matters to them is their returns. And there, Tesla under Musk is a runaway winner vs. Block under Dorsey.
That's not to say Block (formerly known as Square) hasn't been a solid performer, too. Shares are up 446% from their first closing day of trading on Nov. 19, 2015. That works out to roughly a 27.5% average annual return. That certainly tops the S&P 500 by a mile during that time period. The S&P 500 during Block's life span is up just 98.1% or 10.3% annually.
Take Our Anonymous Survey And Tell IBD What Characteristics Are Most Important For Online Brokers
But Block's gains are minuscule by Tesla standards. Shares of the electric car company are up 18,596% since its founding on June 29, 2010. That works out to 55% annualized, or roughly double the average annual returns of Block.
Musk Vs. Dorsey In Profitability
Tesla's financial performance outclasses Block's in just about every aspect too.
Tesla is profitable, making $9.5 billion in net income last year while Block lost $489 million. The net margin at Tesla is a solid 10.3%, vs. a paltry 0.9% at Block. Additionally, Tesla's revenue in 2021 of $67.2 billion is nearly 300% higher than Block's.
Part of that's due to Tesla's massive asset base of $68.5 billion, versus just $28.9 billion for Block. But Musk and company are just more skilled at driving returns out of the company's resources. Tesla's return on assets, or the amount of profit derived from all its assets, is 7.1% last year. It's just 1.2% at Block.
But more important to investors is how much profit is driven out of the money they've entrusted management with. And here, Tesla is the stand out with a return on equity of 20.4%. That's four times greater than Block's5.3% return on equity.
Some might argue that Block is young, and it is 6 years younger, and must invest in the future. That's true. But even here, Tesla is outclassing Block. Tesla plowed $7.1 billion into capital expenditures in 2021, vs. just $153 million at Block.
Musk Vs. Dorsey: The Bottom Line
You're not going to find many complaints from investors on their bet on Musk. Tesla is now worth $908 billion, making it one of the most valuable companies in the S&P 500. And that's made Musk worth $255 billion, the richest person in the world, says Bloomberg.
Block, though, is still trying to find its way. It is worth $43 billion, or 95% less than Tesla, and Dorsey's net worth is 98% less at $5.3 billion. And it's possible the battle isn't over. Dorsey's big skill is growing new businesses, not necessarily extracting profit out of them. Block's five-year annualized revenue growth of 53.6% actually tops Tesla's at 50.4%.
Perhaps there's another round to this battle just yet.
Elon Musk Vs. Jack Dorsey By The Numbers
Tesla has the edge in most areas
| Tesla | Block | |
|---|---|---|
| CEO | Elon Musk | Jack Dorsey |
| Founded | 2003 | 2009 |
| Age of CEO | 50 | 45 |
| CEO wealth ($ billions) | $255 | $5.34 |
| Market value ($ billions) | $908.4 | $43.1 |
| Annualized stock gain from inception | 55% | 27.5% |
| EPS excluding items | $8.32 | -$0.97 |
| Revenue ($ millions) | $67,166 | $16,288 |
| Net income ($ millions) | $9,516 | ($489) |
| Cap Ex ($ millions) | $7,141 | $153 |
| Assets ($ millions) | $68,513 | $28,885 |
| Debt ($ millions) | $6,665 | $5,284 |
| In S&P 500 | Yes | No |
| Return on assets (2021) | 7.1% | 1.2% |
| Return on capital (2021) | 10.5% | 1.9% |
| Return on equity (2021) | 20.4% | 5.3% |
| Gross margin (2021) | 25.3% | 25% |
| Net margin (2021) | 10.3% | 0.9% |
| Five-year rev growth | 50.4% | 53.6% |
| Five-year gross profit gr. | 53.4% | 48.6% |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
