Tesla CEO Elon Musk’s support for Donald Trump’s presidential bid has propelled Tesla’s market value to unmatched heights, surpassing traditional automakers. As competitors face challenges like China’s economic slowdown and potential Trump tariffs, Tesla’s stock has surged, hitting a $1 trillion valuation last Friday — a level last seen in April 2022.
Tesla now outvalues the combined worth of the next 15 largest automakers, including Toyota, General Motors, Stellantis, and Hyundai. Only when adding in smaller brands like Kia, Renault, and Nissan does the valuation gap close. Tesla’s U.S.-based production in California and Austin also shields it from import disruptions affecting other EV makers.
Investors are optimistic about Trump’s proposed corporate tax cut from 21% to 15% for U.S. manufacturers, which would benefit Tesla. Musk may also see federal legislation on autonomous vehicles, replacing state-level regulations and accelerating Tesla’s self-driving rollout.
PayPal co-founder David Sacks, a Musk ally and Trump supporter, attributes Tesla’s stock surge to expected regulatory relief under a Trump administration, easing scrutiny on Musk’s ventures. Sacks described this shift as removing a “lawfare discount” that previously impacted Tesla’s stock due to regulatory pressures.
Some analysts caution that Tesla’s valuation might be overly optimistic. Tesla’s earnings multiple is significantly higher than that of major tech firms like Amazon, Microsoft, and Alphabet, with investors paying 100 times its estimated 2025 earnings per share. This high multiple suggests Tesla’s stock price may be driven more by sentiment than earnings fundamentals.
Future Fund manager Gary Black warned of a widening gap between Tesla’s stock price and Wall Street’s valuation metrics. Without further earnings growth, he noted, analysts may struggle to justify Tesla’s elevated price targets.
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