Tesla Inc. (TSLA) experienced a solid surge in its stock value on Friday, marking one of the most significant weekly gains for the electric vehicle (EV) giant in recent years. The stock price spiked more than 24 points, or 8.2%, to close at $321.22, with an intraday high of $328.71, propelling Tesla’s market capitalization over the $1 trillion threshold for the first time since early 2022. This impressive rally was largely fueled by investor optimism surrounding CEO Elon Musk’s relationship with President-elect Donald Trump.
The broader market also saw substantial gains, with the Dow Jones Industrial Average (DJIA) crossing the 44,000 mark for the first time, and the S&P 500 (SPX) surpassing 6,000. However, Tesla’s performance stood out, soaring by almost 30% over the week. This surge reinstated Tesla into what has been colloquially known as the “Magnificent Seven,” a group of tech giants also including Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Meta (META), all of which boast market caps exceeding a trillion dollars.
Tesla’s stock has been on a roller coaster ride, known for its volatility, but recent developments have shifted the momentum upwards. The company reported better than expected third-quarter earnings and delivery numbers, and the anticipation around the testing of its robotaxi, the Cybercab, slated for next year, has further bolstered investor confidence. However, this week’s rally was particularly sparked by the political developments involving Trump’s victory, which has implications for Tesla’s operations and market position.
Musk, who also leads SpaceX and owns X (formerly Twitter), has a keen interest in Tesla due to its potential for significant growth or risk based on policy changes. Initially, there were concerns that a Trump administration might undo EV tax credits, potentially hampering Tesla’s sales growth. Despite these fears, investors appear to be looking beyond this issue, focusing instead on Tesla’s unique position in the EV market.
Analyst Dan Ives from Wedbush Securities highlighted Tesla’s strategic advantage in a potential non-EV subsidy environment under Trump. “Tesla has the scale and scope that is unmatched in the EV industry, and this dynamic could give Musk and Tesla a clear competitive advantage,” Ives noted in a recent analysis. He predicts that a Trump presidency could add between $40 to $50 per share to Tesla’s stock, suggesting that Tesla could exceed a $1 trillion valuation if autonomous driving and Full Self-Driving (FSD) technologies see accelerated adoption starting in 2025.
Trump’s political win isn’t just about policy for Tesla; it’s also personal. Trump has hinted at appointing Musk to lead a new commission aimed at enhancing government efficiency, a move that would likely benefit Tesla through favorable regulations and possibly direct contracts or support.
The synergy between Musk’s business interests and Trump’s policy inclinations seems to have catalyzed this market response, making Tesla’s stock not just a bet on the company’s technology and market position, but also on political outcomes. For Tesla investors and Musk himself, this political alignment with Trump appears to be turning into a significant financial windfall, showcasing how intertwined business strategy can become with political fortunes in today’s market dynamics.
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