Tesla stock's remarkable postelection rally continued early Monday.
Shares of the electric-vehicle maker were up 9% in early trading.
Early gains left Tesla stock up about 39% since the Nov. 5 presidential election, and up 41% year to date. The postelection rally has created almost $320 billion in stock market value, pushing Tesla's market capitalization to about $1.1 trillion. Shares haven't closed above $350 since April 2022.
Many Wall Street analysts agreed that Donald Trump's election to a second term in the White House could benefit Tesla given the close relationship between Trump and Tesla CEO Elon Musk that developed during the campaign.
Monday, Wedbush analyst Dan Ives boosted his target price to $400, the highest among major brokers according to FactSet, from $300. He rates Tesla stock Buy.
"The Trump White House win will be a game changer for the autonomous [driving] and AI story for Tesla and Musk over the coming years," wrote Ives. "We fully expect under a Trump White House these key initiatives will now get fast-tracked as the federal regulatory spiderweb that Musk & Co. have encountered over the past few years around [self-driving cars] clears significantly under a new Trump era."
Large target price boosts typically help stocks. Some short covering may also be helping. Short sellers borrow stock they don't own and sell it, betting prices will decline. When stocks rally rapidly, short sellers can rush and buy all at once, sending shares higher.
About 3% of the Tesla shares available for trading, or about 79 million shares, have been sold short, according to FactSet. That isn't a high but unalarming amount. The short-interest ratio for stocks large tech stocks is closer to 1%.
Through early trading, short-seller losses were pushing $7 billion in Tesla stock since the election. Their pain is real, but given the amount of stock sold short, and the trading volume of Tesla shares, a short squeeze isn't the likely cause of the recent rally.
Investors simply feel very good about the prospects for Tesla shares in a second Trump administration.