Tesla stock rose 3% early Thursday after a big target price bump from a Wall Street bull and after realizing huge—somewhat surprising—post election gains on Wednesday.
The early move follows a massive 15% jump in Tesla stock following Donald Trump's presidential election win over Democratic challenger Kamala Harris.
Early in the election cycle, a Tesla rise following a Trump victory was far from certain, or even expected. Trump isn't a fan of EVs, disparaging them and Biden-era EV subsidies several times in the recent past.
But Tesla CEO Elon Musk endorsed the former president's bid to recapture the White House shortly after a failed assassination attempt in July. After that, Musk and Trump grew closer with the auto executive campaigning hard for the now president-elect.
There is no reason to doubt Musk's sincerity, but aligning himself with Trump turned out to be an incredible hedge for Musk's EV maker.
EV stocks didn't have a good day on Wednesday. Lucid stock fell 5.3%, Polestar shares fell 8.2%, and Rivian dropped 8.3%.
The difference between falling 8% and rising 15% for Tesla stock works out to about $185 billion in stock market value. The $37.09 rise in Tesla shares added roughly $120 billion in stock market value, exceeding the amount Musk likely donated to the Trump campaign by roughly 1,000 times. What's more, Musk's net worth increased by some $25 billion the day after the election.
"Musk made a bet for the ages," said Wedbush analyst Dan Ives. He rates Tesla shares Buy and has a $300 price target on the stock.
The gains Wednesday leave Tesla shares up about 16% so far this year. They also sent Tesla stock above recent resistance-- a term used by technical stock market analysts who look at stock charts to get a sense of levels where investors have bought and sold stocks in the recent past.
Tesla has a "bullish chart pattern," said CappThesis founder Frank Cappelleri. If shares can stay above $270 in the coming days, he thinks $400 could be in play in the coming months. That's a significant increase from current levels. Fairlead Strategies analyst Will Tamplin sees some additional resistance around $340.
At any of the recent levels, investors still have to think about what to pay for Musk's EV company. Shares fetch about 76 times estimated 2025 earnings, far higher than the market's 21 times multiple. Tesla's earnings, of course, are expected to grow much faster than the market.
Earnings growth has to accelerate for Tesla stock to maintain recent momentum into 2025 and beyond -- no matter who is in the White House.
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