Tesla’s market value surged past the $1 trillion mark on Friday, driven by a sharp rally in its stock price, fueled by optimism that CEO Elon Musk’s companies will receive favorable treatment under President-elect Donald Trump. This follows extensive support Musk provided during Trump’s campaign.
Tesla’s stock jumped 8.2%, reaching $321.22 per share, pushing the company’s valuation above $1 trillion for the first time in over two years. The stock’s strong performance led to a 29% increase in value this week alone, adding more than $230 billion in market capitalization. This was Tesla’s most significant weekly gain since January 2023.
Garrett Nelson, a senior equity analyst at CFRA Research, stated that Tesla and Musk were among the biggest beneficiaries of Trump’s victory. He believes that Trump’s win could accelerate regulatory approval for Tesla’s autonomous driving technology. According to Nelson, Musk could push for favorable regulations that would support Tesla’s autonomous vehicle plans, while also seeking to delay any potential enforcement actions from the U.S. National Highway Traffic Safety Administration (NHTSA) concerning Tesla’s current driver-assistance systems.
Musk, who has been heavily invested in the development of self-driving vehicle technology, abandoned plans for an affordable electric car priced under $30,000 in favor of focusing on autonomous vehicle advancements. However, the commercialization of such technology has faced significant delays due to both development and regulatory challenges.
David Whiston, an equity strategist at Morningstar, suggested that if Musk can persuade Trump to establish federal rules for autonomous vehicles, it would be beneficial for the auto industry. He explained that many companies would prefer a unified set of regulations at the federal level rather than the patchwork of rules created by individual states.
Tesla’s stock price surged in late October after the company reported a rise in its quarterly profit margins and projected 20% to 30% growth in deliveries for the coming year. Tesla has maintained its position as the world’s most valuable automaker, far ahead of competitors like Japan’s Toyota Motor and China’s BYD.
Currently, Tesla’s shares trade at 93.47 times their 12-month forward earnings estimates. In comparison, Nvidia, an AI chip giant, trades at 38.57 times forward earnings, Microsoft at 30.77, and Ford at just 6.29. This highlights Tesla’s premium valuation relative to other major automakers and tech companies.
