Tesla shares rose on Monday, extending an impressive fall rally that included a $230 billion rise in market value last week, as investors continue to reassess the group's post-election prospects and a top Wall Street analyst issues a bullish outlook for its autonomous vehicle ambitions. .
tesla (TSLA) is seen as a major beneficiary of former President Donald Trump's sweeping election victory, which will likely include Republican control of Congress, thanks in part to CEO Elon Musk's vocal and monetary support for his candidacy.
Musk, who could also be in line to play a key role in the Trump administration, has touted his interest in heading a so-called “government efficiency commission” aimed at cutting hundreds of billions of spending from the federal budget.
He has also weighed in on potential Cabinet appointments, added his weight to comments about the future of the Federal Reserve, and reportedly attended a phone call between the president-elect and Ukraine's leader, Volodymyr Zelensky.
All of that wreaked havoc on Tesla short sellers, who had bet against the group heading into last month's third-quarter earnings report, with data from S3 Partners indicating market value losses of around $5, 2 billion between election day and the close of business on Friday.
However, Tesla's opposite, and more lucrative, bet was made earlier this year by Mush himself, according to Dan Ives, the veteran Tesla bull, who sees a Trump White House as a “game changer for the history of autonomy and ai for Tesla and Musk”. in the coming years.”
Big bet reward?
A Trump administration is also likely to revamp the broader EV landscape by imposing stricter tariffs on foreign-made cars and eliminating some of the tax credits and rebates that have unlocked profit potential for new market entrants. , like Ford Motor. (F) and general motors (GM) .
“The stakes were high after Musk spent more than $130 million to help elect Donald Trump and other Republicans this election cycle, according to filings,” said CFRA analyst Garrett Nelson.
“Depending on the House outcome, we also see risks to current EV tax credits due to changes to existing tax law, which we believe will widen Tesla's competitive moat by making competing EV models even more uneconomical, as we believe Tesla is the only profitable manufacturer of electric vehicles,” he added.
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Reuters has also reported that Musk could pressure the new administration to drop potential actions by the National Highway Traffic Safety Administration, which has long been a thorn in the side of Musk's self-driving ambitions.
“In essence, Musk made a big strategic bet on a Trump White House victory that will be known as a 'forever bet' for Tesla bulls, as now Tesla and Musk are set to reap the benefits of a new friendly regulatory era in the Beltway ahead,” said Ives, who raised his price target for Tesla by $100 to $400 per share in a note published Monday.
Ives said he believes the ai part of Tesla's business is worth around $1 trillion, and that the stock will climb the $2 trillion threshold, in terms of market capitalization, over the next twelve to eighteen months.
“We estimate that the ai and autonomous opportunity is worth $1 trillion to Tesla alone and we fully expect that under the Trump White House these key initiatives will now accelerate like the federal regulatory spider web that Musk & Co. has encountered in recent years. FSD/autonomous are significantly clarified under a new Trump era,” Ives argued.
More gains ahead
Musk told investors last month that he thought the company would resolve its current fully autonomous driving challenges by the end of next year, something he said will be the key determinant for Tesla's ultimate stock price.
“If we execute on our goals, I think we will; my prediction is that Tesla will become the most valuable company in the world, probably by a long shot,” Musk said.
Tesla posted better-than-expected third-quarter earnings of 72 cents a share last month, and profit margins improved by nearly two percentage points as the cost of producing its flagship electric vehicles fell to a record low and global prices stabilized.
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Tesla also said it expects “slight growth in vehicle deliveries” this year, following last year's record 1.8 million, and CEO Elon Musk added on the investor call that he sees potential for a growth rate from 20% to 30 in 2025 “no.” “Enduring negative external events… like a big war breaking out or interest rates going through the roof or something.”
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“We can't overcome massive force majeure events. But I think with our lower-cost vehicles with the advent of autonomy, my best estimate is 20% to 30% growth next year,” he added.
Tesla shares rose 7% in premarket trading to indicate an opening price of $343.6 each, a move that would take the stock's six-month gain to around 100%.
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