Tesla's market value breached the $1 trillion-mark in a sharp rally on Friday, November 8, on growing bets of a favorable treatment for CEO Elon Musk's companies in return for his support for the Republican President-elect Donald Trump in his poll campaign. The electric automaker's shares rose over six per cent to a more than two-year high of $315.56 after gaining 19.3 per cent this year.
Tesla's valuation crossed the $1 trillion mark for the first time in more than two years. The auto stock gained 29 per cent this week, adding more than $230 billion to its market capitalization (Mcap), its best since January 2023. It is among seven companies in the S&P 500 index with that status. The last time Tesla shares traded above that level was in April 2022.
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According to Forbes ' real-time billionaires list, Musk's wealth topped $300 billion. The world's richest man could push for favourable regulation of Tesla's planned autonomous vehicles and also get the US National Highway Traffic Safety Administration to hold off on potential enforcement actions involving the safety of Tesla's current driver-assistance systems.
Musk has focused on self-driving vehicle technology, ditching plans to build an economy car priced under $30,000. However, some development and regulatory hurdles in the US have delayed the commercialization of such technologies.
Tesla’s stock price has been on a roller-coaster ride in 2024. It was down 43 per cent for the year on April 22, but has been on a tear since then. Tesla shares jumped in late October after the company reported a rise in quarterly profit margin and forecast 20 to 30 per cent growth in deliveries next year, buoyed by sales of the highly profitable product ‘Full Self-Driving’ driver assistance software.
For years, it has been the world's most valuable automaker, with Japan's Toyota Motor, China BYD, and others trailing by several hundred billion dollars. Tesla shares trade 93.47 times its 12-month forward earnings estimates, compared with 38.57 for AI chip giant Nvidia, Microsoft's 30.77, and Ford's 6.29.
“Tesla and CEO Elon Musk are perhaps the biggest winners from the election result, and we believe Trump's victory will help expedite regulatory approval of the company's autonomous driving technology,” Garrett Nelson, senior equity analyst at CFRA Research, told news agency Reuters.
With inputs from Bloomberg and Reuters
