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tesla (NASDAQ:TSLA) shares rose following Donald Trump's victory, due to Elon Musk's apparent alliance with the former president. As expected, it was the most purchased stock by investors who used the Hargreaves Lansdown platform last week.
Interestingly, though, Tesla was also the best-selling stock for the week, perhaps indicating that some investors were looking to cash in on the rising stock: the stock was up 31% last week.
Microstrategy (NASDAQ:MSTR) was the second most bought stock by Hargreaves Lansdown investors, who apparently preferred US stocks and the 'Trump Trade' rather than those closer to home.
So let's take a closer look at why investors might have been interested in these two companies.
Tesla: an ally in the White House
Investors flocked to Tesla stock following Trump's presidential victory for several key reasons.
First, Musk's vocal support for Trump may result in the South African billionaire having influence in the incoming presidency. Trump has even suggested that Musk could play an efficiency role within the administration.
Second, Trump's proposed policies, including lower corporate taxes and deregulation, are seen as potentially beneficial to Tesla's growth and profitability. Additionally, Trump's stance on tariffs, particularly against Chinese imports, could give Tesla a competitive advantage over foreign electric vehicle manufacturers in the US market.
Additionally, the potential reduction in EV subsidies under the Trump administration is also seen as potentially benefiting cash-rich Tesla more than its smaller competitors, given the company's dominant market position and scale. company.
Lastly, but potentially most importantly, investors speculated that Musk's relationship with Trump could lead to advantageous policies for Tesla, particularly in areas such as self-driving regulations.
This is important because Tesla shares are valued for their potential in autonomous driving and robotics, with a price-to-earnings (P/E) ratio of 100 times, or five times higher than that of its peers. of electric vehicles.
Personally, I'd say the company is falling behind Waymo and its Chinese peers, as its Robotaxi reveal fell flat a bit.
It's a very expensive stock, which probably explains why it was also the most sold stock last week by Hargreaves Lansdown investors. It's also not on my watch list given the stock's crazy multiples.
<h2 class="wp-block-heading" id="h-microstrategy-a-bitcoin-play”>MicroStrategy: A bitcoin Play
Investors flocked to shares of MicroStrategy, an American bitcoin development company, last week, buoyed by a surge in the price of bitcoin following Trump's election victory.
Trump's unexpected pro-crypto stance, including promises to make the United States a “crypto capital” and establishing a national bitcoin reserve, ignited enthusiasm in the cryptocurrency market.
Added to this was the promise to put an end to the “anti-crypto crusade” and replace SEC Chairman Gary Gensler, signaling a potentially more favorable regulatory environment for digital assets.
This change in Trump's approach towards cryptocurrencies led to bitcoin soaring above $80,000, directly benefiting MicroStrategy due to its significant bitcoin holdings.
The company's '21/21 Plan' will allow it to invest $42 billion in bitcoin over the next three years and this appears to align well with the market's renewed optimism for cryptocurrencies.
It's an interesting company, but cryptocurrencies still don't convince me. There is no P/E ratio as it is not expected to turn a profit this year despite rising cryptocurrency holdings. Again, it's a stock I stay away from because I prefer more predictable industries.
