Tesla shares hit all‑time high amid Musk's Trump alliance
Tesla shares soared to their highest level in history, surpassing the previous record set in 2021. According to CNBC, the record-breaking stock prices resulted from increased enthusiasm from Wall Street for Elon Musk's electric vehicle company following Donald Trump's election as President of the USA.
Tesla shares rose nearly 6% on Wednesday to $424.77, about $15 above their previous peak of $409.97 on November 4, 2021.
Tesla shares up
Tesla's market value has increased by about 71% this year, with almost all of these gains occurring since Donald Trump's election victory at the beginning of last month.
The 38% rise in Tesla shares in November marked the best monthly performance since January 2023 and the 10th best in history.
Elon Musk, Tesla's main shareholder, allocated $277 million to campaign support for Donald Trump, according to Federal Election Commission documents, and has turned his support for the Republican candidate into another full-time job by using his X platform to continually promote his preferred candidate.
The billionaire's new role
The world's richest man, whose net worth rose to over $372 billion according to Forbes, is set to lead the "Government Efficiency Department" of the Trump administration, alongside former Republican presidential candidate Vivek Ramaswamy.
His new role could grant Musk authority over federal agency budgets and staff, as well as the ability to push for the elimination of inconvenient regulations.
Since Trump's victory, Musk has accompanied the president-elect in meetings with world leaders and has begun advising him and Congress members on which federal agencies, regulations, and budget positions he would like to eliminate or significantly reduce.
Musk mentioned during Tesla's quarterly earnings call in October that he intends to use his influence with Trump to establish a "federal approval process for autonomous vehicles." Currently, approvals occur at the state level.
According to Craig Irwin, an analyst at Roth MKM, Trump's influence drives the share movement. He observed this during CNBC's "Squawk on the Street" last week.
Irwin recently increased his price target for Tesla shares to $380 from $85. In a report, he stated that Musk's apparent support for Trump has likely expanded the base of Tesla enthusiasts and boosted credibility for a surge in demand.
On Wednesday, Goldman Sachs analysts raised their price target for Tesla, joining the group of investment firms that have increased their price expectations or ratings on Tesla shares.
Goldman analysts noted that the market is taking a more forward-looking perspective on Tesla, particularly regarding its AI-related capabilities.
Tesla's record growth marks a dramatic turnaround from its performance earlier in the year. The company's shares fell by 29% in the first three months of 2024, marking the worst quarter for the company’s shares since late 2022 and the third worst since Tesla went public in 2010.
At that time, investors were concerned about Tesla's core business, which experienced a revenue decline in the first quarter, partly due to increased competition from China.
