Tesla (TSLA) rose on Friday, capping off a huge week for the EV maker as the stock hit its highest close in more than two years. Optimism about CEO Elon Musk’s relationship with President Trump has sent investors into a frenzy, with Tesla’s market capitalization now surpassing the $1 trillion mark.
To be fair, stocks overall have hit records, with the Dow Jones Industrial Average crossing the 44,000-point mark for the first time and the S&P 500 eclipsing the 6,000-point mark. But Tesla’s monstrous move is one for the record books: its shares are up a whopping 29% in just five days.
Shares of Tesla rose 8.2% to $321.22 on Friday, reaching as high as $328.70 as the company achieved a trillion-dollar valuation for the first time in more than two years. Only Nvidia, Apple, Microsoft, Amazon, Alphabet and Meta are worth more, meaning the original “Magnificent Seven” has been re-formed.
Huge moves both up and down aren’t new for Tesla, though the stock has recently started moving higher after weakness in early 2024. Better earnings and deliveries in the third quarter, and the promise of serious testing of Tesla’s robotaxi Cybercab next year, have boosted it optimism fueled even before this week’s Trump-inspired stock rally.
While Musk controls companies like SpaceX (which includes Starlink) and X (formerly Twitter), Tesla investors have the most to gain – or lose – from Musk’s ties to Trump.
Threats of rolling back EV tax credits by the Trump White House and Republican Party-led Congress were seen as a headwind to the Tesla volume growth story. Wall Street and investors are ignoring this thorny issue for the time being.
“Tesla has the scale and scope unparalleled in the EV industry, and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled with likely higher Chinese tariffs that would continue to drive out cheaper Chinese EVs. players (BYD, Nio, etc.) will not flood the US market for years to come,” Wedbush’s Dan Ives wrote in a note on Wednesday.
“We believe a Trump victory could add $40-$50 per share to Tesla stock,” Ives added, noting the company could surpass $1 trillion in market capitalization “if autonomous/FSD becomes effective from 2025 accelerated.”
In addition to Tesla, due to Musk’s support of his candidacy, Trump has even promised Musk a position in his administration, suggesting that Musk could lead a committee to increase government efficiency.
It’s because of that close relationship with Trump, trade policy and even environmental and manufacturing initiatives that Musk may have a hand in, that investors are eager to bet on Tesla.
