Tesla's market value surpassed $1 trillion on Friday, following a significant surge in its stock price, fueled by the close relationship between President-elect Donald Trump and Tesla CEO Elon Musk.
The rally lifted Tesla's share price by 8.2%, reaching $321.22 and pushing the electric vehicle maker's valuation past the $1 trillion mark for the first time in over two years. This marks a remarkable rebound after Tesla's stock had been down 43% earlier this year.
Tesla's recent stock surge comes after a 29% increase in the past week alone, adding more than $230 billion to its market value. This spike was triggered by Musk's vocal support for Trump, who has praised the Tesla CEO in public speeches, according to Fox Business.
Trump, while critical of electric vehicle (EV) incentives, has commended Musk's achievements and referred to him as a "super genius."
Garrett Nelson, a senior equity analyst at CFRA Research, believes that Musk and Tesla stand to gain from Trump's victory, particularly when it comes to the approval of Tesla's autonomous driving technology.
"We believe Trump's victory will help expedite regulatory approval of the company's autonomous driving technology," said Nelson.
Elon Musk Eyes Federal Rules for Autonomous Vehicles
With the potential for regulatory changes, Musk could push for federal rules that favor the development of autonomous vehicles, potentially easing the approval process for Tesla's Full Self-Driving (FSD) technology.
However, the path to commercializing Tesla's self-driving technology has not been smooth. The National Highway Traffic Safety Administration (NHTSA) has been investigating Tesla's FSD system after several accidents, including fatal crashes. Despite this, Tesla continues to work toward increasing the automation of its vehicles.
The rally in Tesla's stock also follows broader market trends, with significant investment flowing into the company. More than 4.7 million Tesla call options were traded on Friday, setting a new daily record, said Bloomberg.
While some analysts are uncertain whether Trump's policies will directly benefit Tesla, many investors are betting that the company will continue to thrive under his administration.
Despite Tesla's strong performance, some analysts remain cautious. While the company's valuation has soared, Tesla's profits are expected to decline by 23% this year.
Additionally, its foray into artificial intelligence remains uncertain, as Musk's ambitious plans for Tesla's AI-driven features have yet to garner widespread enthusiasm. Nevertheless, Tesla's stock continues to be a major player in the market, with many investors hopeful for further gains.
