Tesla shares reach record high amid Trump-backed surge
Tesla shares have risen to their highest level ever, surpassing the previous record set in 2021. The surge in valuation is attributed to heightened enthusiasm from Wall Street for Elon Musk's electric vehicle company following Donald Trump's election as President of the USA, CNBC reports.
Tesla shares rose nearly 6% on Wednesday to $424.77, about $15 above the previous peak of $409.97 on November 4, 2021.
Tesla shares up
Tesla's market value has increased by about 71% this year, with nearly all of those gains occurring since Donald Trump's election victory at the beginning of last month.
The 38% rise in Tesla shares in November marked its best monthly performance since January 2023 and the 10th best in history.
Elon Musk, Tesla's main shareholder, allocated $277 million to a campaign supporting Donald Trump, according to Federal Election Commission documents, and turned his support for the Republican candidate into a full-time job, using his platform X to continuously promote the preferred candidate.
The new role of the billionaire
The richest person in the world, whose net worth has exceeded $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 give Musk power over federal agency budgets, personnel, and the ability to push for the elimination of inconvenient regulations.
Since Trump's victory, Musk has accompanied the President-elect to meetings with world leaders and has begun advising him and members of Congress on which federal agencies, regulations, and budgetary positions he would like to eliminate or significantly reduce.
During a discussion on Tesla's quarterly results in October, Musk said he plans to use his influence with Trump to establish a "federal process for approving autonomous vehicles." Currently, approvals are done at the state level.
"Shares are reacting to Trump's impact," said Craig Irwin, an analyst at Roth MKM, on CNBC's program "Squawk on the Street" last week.
Irwin had just raised his price target for Tesla shares to $380 from $85, writing in a report that "Musk's genuine support for Trump has likely doubled the pool of Tesla enthusiasts and increased credibility for overstating demand."
On Wednesday, Goldman Sachs analysts raised their price target for Tesla, joining a group of investment firms that have raised their price expectations or assessments of Tesla shares.
Goldman's analysts wrote that "the market is taking a more forward-looking approach to Tesla, including about its capabilities related to artificial intelligence."
Record growth for Tesla marks a dramatic turnaround from its performance earlier in the year. The company's shares fell 29% in the first three months of 2024, marking the worst quarter for its shares since the end of 2022 and the third worst since Tesla went public in 2010.
At that time, investors were concerned about Tesla's core business, which saw a revenue decline in the first quarter, partly due to increased competition from China.
