Tesla’s market value surged past $1 trillion on Friday, marking the first time it achieved this milestone since early 2022. The electric vehicle giant, helmed by billionaire Elon Musk, rode a significant stock rally that followed Donald Trump’s re-election. This impressive performance reflects investors’ optimism regarding potential policies favoring the EV industry under Trump’s renewed administration.
Key Developments
Tesla shares experienced a sharp rise, jumping over 10% in intraday trading to reach nearly $330 before closing with an impressive 8% increase at $321. This growth extended Tesla’s three-day rally to a remarkable 28%, contributing to broader stock market gains fueled by Trump’s electoral success.
With this leap, Tesla’s market capitalization surpassed $1 trillion for the first time since April 2022, nearly doubling over the last six months, according to data from YCharts.
Impact on Musk’s Wealth
Elon Musk’s wealth surged to over $300 billion on Friday, the first time he’s reached this benchmark in more than two years. Friday’s stock performance added around $13 billion to Musk’s net worth, widening his lead over Oracle’s Larry Ellison, whom Musk considers a close friend, by a substantial $70 billion.
Tesla Stake and Stock Options
Musk remains Tesla’s largest shareholder, with a 13% stake valued at about $130 billion. Additionally, he holds another 9% stake currently under appeal in Delaware court regarding a stock option bonus, which Forbes factors into Musk’s valuation at a discounted rate of 50%. Tesla shares still remain about 25% lower than their peak value of $415 in late 2021, when Musk’s net worth also peaked near $320 billion.
Musk, a known Trump supporter, openly endorsed the former president in July, contributing about $130 million to Trump’s campaign. Musk’s alignment with Trump also brought him into the spotlight on the campaign trail, and he was notably seen at Trump’s victory celebration alongside Trump’s family. Discussions have circulated about Musk potentially joining Trump’s administration in a role the president-elect described as “secretary of cost-cutting.”
Factors Behind Tesla’s Surge
This week saw a notable uptick across the stock market, with the S&P 500 poised for its best week of the year. Other American auto giants, Ford and General Motors, also saw stock increases, rising by 7% and 8%, respectively. However, Tesla stands out, benefiting from potential policy advantages linked to Trump’s administration.
Wedbush analyst Dan Ives outlined several key areas where Tesla could see gains under Trump’s leadership in a recent client note. According to Ives, one potential policy change could involve the removal of federal tax credits for electric vehicles, which could allow Tesla to enjoy a “clear competitive advantage” as smaller EV companies may face difficulties entering the market. Additionally, Trump-backed tariffs on Chinese imports could deter cheaper Chinese EV brands, further securing Tesla’s foothold in the U.S. market. Ives also speculated that Trump’s administration might expedite regulatory approvals for Tesla’s autonomous vehicle initiatives, streamlining the company’s path to innovation.
Tesla’s strong performance reflects market expectations that Trump’s pro-industry policies may yield significant advantages for major U.S.-based automakers, with Tesla well-positioned to capitalize on potential regulatory and market shifts.
