Tesla (TSLA, Financial) has seen a significant stock surge, rising by 31% with a market value increase of nearly $250 billion following Trump's victory in the U.S. election. Elon Musk's close ties with Trump could offer regulatory advantages for the company. However, Wall Street analysts express concern over the stock's overheated status, predicting a potential 28% decline, highlighting challenges in evaluating Tesla's future amid political shifts. Analysts are assessing how Trump's administration could impact Tesla, including potential reversals of Biden's EV policies and U.S.-China relations.
Despite the optimism, some Tesla bulls find the surge irrational, especially considering Trump's skepticism towards electric vehicles. Adam Sarhan from 50 Park Investments noted that while Trump's policies might benefit Tesla, the recent stock rally seems overly exuberant short-term. The debate continues on whether Tesla should be seen as a car manufacturer, a tech company, or a unique hybrid, complicating its valuation.
In the wake of Tesla's stock rebound after solid third-quarter results, its price-to-earnings ratio reached 104, significantly higher than traditional automakers and even tech giants. Trump's presidency adds a layer of uncertainty, potentially causing inflationary pressures that impact Tesla and others facing dwindling sales.
Some analysts, like Edison Yu from Deutsche Bank, posit that certain Trump policies might favor Tesla, such as simplifying federal regulations for autonomous vehicles and bolstering the company's robotics development. The end or alteration of the Inflation Reduction Act and additional tariffs on imported parts could further enhance Tesla's competitive standing.
Meanwhile, analysts like Adam Jonas from Morgan Stanley maintain a 'Buy' rating for Tesla's stock, citing the difficulty in quantifying the benefits Musk's rapport with Trump might bring. Tesla's stock recently decreased by 6.2% to $328.49 but showed a pre-market increase of 3.3% after Musk was appointed to lead a new government efficiency department alongside entrepreneur Vivek Ramaswamy.
Tesla's recent 50% stock increase post-earnings has raised doubts on Wall Street, even amidst Musk's connections with Trump and other influencing factors. Aptus Capital Advisors' David Wagner suggests that even for those who believe in Tesla's long-term growth, the current rally might be unsustainable, questioning the rationality of political factors impacting the stock's performance.
