To The Moon

For long-time $Tesla Motors(TSLA)$ bulls like myself, the recent surge in TSLA’s stock price has been a rewarding moment. After what felt like a turbulent ride with volatility sparked by Elon Musk’s acquisition of Twitter, macroeconomic uncertainties, and supply chain issues, the stock has come roaring back. In just a matter of days following the U.S. election results, Tesla’s market cap soared by nearly a third, propelling it back into the exclusive $1 trillion valuation club. This dramatic rebound underscores a broader thesis: Elon Musk’s bet on Donald Trump’s election has played out exceptionally well, positioning Tesla miles ahead of its competitors. However, the question now is whether it’s time to chase this rally or stay cautious. Here’s why I believe this may not be the best time to buy but a good moment to hold.

Elon Musk attends a Donald Trump Campaign Rally At Madison Square Garden In NYC

Elon Musk’s alignment with Donald Trump was, in hindsight, a high-risk, high-reward strategy. Musk’s “all-in” gamble wasn’t a political endorsement as much as it was a strategic move aimed at favorable policies for Tesla’s growth. Trump’s stance on deregulation, tax breaks, and tariffs have significant implications for Tesla. Let’s break this down:

1. Protection from Tariffs and Trade Wars: Under Trump, there’s a real possibility of new tariffs on Chinese imports, which would hurt traditional automakers reliant on Chinese parts and materials. Tesla, on the other hand, has strategically positioned itself with its Gigafactories in the U.S. and the recently opened factory in Mexico. This reduces its exposure to Chinese tariffs while benefiting from any “Made in America” push by the Trump administration.

2. Tax Incentives for EVs: Trump’s administration could bring back or increase tax incentives for electric vehicle (EV) buyers, potentially sparking another wave of demand. Tesla is already the leader in EVs, and if tax credits are expanded, this will likely drive more consumers towards Tesla’s lineup, widening the gap even further between TSLA and its rivals.

3. Deregulation Tailwinds: Trump’s pro-business, anti-regulation approach is a potential boon for Tesla’s operations. We’ve seen Tesla push boundaries in autonomous driving and energy solutions, often clashing with regulatory bodies. A Trump administration could pave the way for faster approvals and fewer regulatory hurdles, giving Tesla a competitive edge.

Tesla’s recent rally has created one of the most significant valuation gaps we’ve ever seen. At over $1 trillion, Tesla is now worth more than the combined market cap of the next 15 largest automakers, including giants like Toyota, General Motors, Stellantis, and Hyundai. This disparity signals a shift in investor sentiment: while traditional carmakers are still grappling with the transition to EVs, Tesla is already positioned as the dominant player in the industry.

However, I caution against viewing this as a clear buy signal. Valuation matters, and at its current price, Tesla trades at a significant premium compared to its peers. This premium reflects high expectations for continued growth and execution, making the stock vulnerable to any negative surprises, whether it’s slower EV adoption, production delays, or macroeconomic headwinds.

While it’s tempting to jump in on a stock that’s soaring, it’s important to recognize the risks of chasing a rally, especially at these valuation levels. Historically, Tesla has had periods of sharp, euphoric gains followed by significant pullbacks. As of now, I believe TSLA is in overbought territory, and new investors might be better served waiting for a more attractive entry point.

Instead of buying at these highs, I’d suggest looking for better opportunities elsewhere in the market or waiting for a dip in TSLA’s price before considering a position. The tech sector as a whole has experienced a resurgence, and there may be other stocks with more favorable risk-reward profiles at the moment.

TSLA Monthly Chart showing a strong breakout

For those who already own TSLA shares, the outlook remains positive, especially if you believe in the impact of Trump’s administration on Tesla’s business environment. The company’s fundamentals are strong, and its leadership in EVs, energy storage, and autonomous driving technology sets it apart from competitors. Additionally, the expansion of Tesla’s Supercharger network, continuous improvement in manufacturing efficiency, and the introduction of new models like the Cybertruck add layers of growth potential.

Elon Musk has proven time and again that he can deliver results, even when the odds seem stacked against him. If you’ve been holding TSLA for the long haul, there’s little reason to sell now, especially with potential tailwinds from a Trump presidency on the horizon. However, be prepared for continued volatility as the market digests the implications of this political shift.

Conclusion

In conclusion, Tesla’s recent surge post-election is a testament to Elon Musk’s strategic acumen and his calculated bet on Trump’s policy environment. The valuation gap between Tesla and the rest of the auto industry is staggering, highlighting investor confidence in Tesla’s growth prospects and its ability to dominate the EV market. That said, I would advise against buying at current levels unless you are prepared for short-term volatility and believe in Tesla’s long-term story.

If you’ve been holding TSLA through the ups and downs, this is a great time to enjoy the gains. But for new investors, patience might be the better strategy. Look for pullbacks or dips to enter, as chasing the stock now could lead to buying at a peak. In the meantime, keep an eye on the broader macro environment and any new policies from Trump’s administration that could impact Tesla’s business.

Final Thought: The political winds have shifted, and so has the market’s view of Tesla. But in the high-stakes world of investing, timing your entry is just as important as picking the right stock.

@MillionaireTiger @Tiger_comments @Daily_Discussion @CaptainTiger @TigerSG

Disclaimer: This is a general analysis and not financial advice. Always conduct your own research before making any investment decisions.