Tesla Stock Surges 10%: Wall Street Bulls Charge After 'Gamechanger' Election

Tesla's stock price soared by 10% on Friday, November 12, 2024, as Wall Street analysts grew increasingly bullish following the U.S. presidential election. The surge in Tesla's stock price can be attributed to the election of former President Donald Trump, who is expected to implement policies favorable to the electric vehicle (EV) manufacturer and its CEO, Elon Musk. This article explores the recent market performance of Tesla, the potential regulatory changes under a Trump administration, and the implications for Tesla's future.



Tesla's stock price has been on a roller-coaster ride in 2024, with a 43% year-to-date decline as of April 22. However, the stock has since rebounded, gaining 29% for the year and reaching a market value of approximately $1.03 trillion. The recent rally in Tesla's stock price can be attributed to several factors, including better-than-expected quarterly profits, solid guidance, and the election of Donald Trump.

Analysts have revised their price targets for Tesla in response to the election results, reflecting a bullish outlook. Dan Ives, a top Wall Street analyst, lifted his price target from $300 to $400, a 33% increase, citing the potential for a "friendlier regulatory era" under the new administration. This optimism is driven by expectations that a Trump White House will fast-track Tesla's AI and autonomous initiatives, potentially worth $1 trillion alone.



Under a Trump administration, Tesla could potentially benefit from regulatory changes that could boost its EV and AI initiatives. One key change could be the imposition of stricter tariffs on overseas cars, which could make it more difficult for foreign competitors to enter the U.S. market, thereby reducing competition for Tesla. Additionally, a Trump administration could potentially remove some of the tax credits and rebates that have supported newer market entrants, further widening Tesla's competitive moat. Furthermore, Musk's influence in the Trump administration could potentially lead to a more favorable regulatory environment for Tesla's self-driving ambitions, as the company could push for the removal of potential action from the National Highway Traffic Safety Administration.

However, caution is warranted when evaluating Tesla's recent stock price surge. Despite the bullish outlook, Tesla's stock is trading at about 102 times forward earnings, significantly higher than AI-darling Nvidia at 39 times. Additionally, Tesla's profits for the year are estimated to drop by 23%, making it the only Magnificent Seven company to see a decline. The company's attempt at becoming an artificial intelligence powerhouse is still far from certain, especially after its self-driving vehicle failed to rouse much enthusiasm following its unveiling in October.

In conclusion, Tesla's stock price surge following the U.S. election reflects Wall Street's growing bullishness about the company's prospects under a Trump administration. However, investors should remain cautious and exercise due diligence when evaluating Tesla's valuation and growth prospects. The high valuation and uncertain earnings outlook suggest that Tesla's stock price may be more a reflection of investor optimism than concrete gains. As such, investors should approach Tesla with a critical and analytical perspective, balancing cautious optimism with skepticism about the company's long-term prospects.