After a highly anticipated election season, former President Donald Trump is returning to Washington. As speculation swirls around potential cabinet appointments, one name stands out: Tesla (NASDAQ: TSLA) CEO Elon Musk. Musk was a key supporter for Trump in the final stretch of the campaign, raising questions about how his role might influence Tesla in the new administration.
While the significance of Musk’s potential role is uncertain, the focus shifts to the implications of the Trump administration’s policy agenda for Tesla’s future.
Here’s a look at why Tesla’s stock could surge as Trump’s inauguration approaches.
Wall Street Insights
Dan Ives, a well-known analyst from Wedbush Securities, compares favorably to Ark Invest’s Cathie Wood for his bold predictions. Recently on CNBC’s “Fast Money,” Ives labeled a Trump presidency a potential “game changer” for Tesla.
This assertion is certainly ambitious, especially before Trump even takes office. Still, there may be merit in Ives’s perspective.
Image source: Getty Images.
Potential Advantages of a Trump Administration for Tesla
Over the last few years, Musk has consistently communicated to investors that Tesla is transitioning from a traditional car company to an advanced robotics and artificial intelligence entity.
A crucial aspect of this transition is Tesla’s focus on autonomous driving. The success of Tesla’s robotaxi service could significantly impact the company’s market position.
For Tesla, mastering autonomous driving could create a competitive edge that rivals may struggle to close. This advancement could lead to increased demand for Tesla vehicles and heightened interest from ride-hailing, car rental, and delivery services.
Despite being cautious, it seems plausible that Musk’s connection with Trump might simplify regulatory challenges that Tesla faces in commercializing its full self-driving (FSD) technology. According to Ives, this opportunity could accelerate Tesla’s FSD timeline by two to three years under Trump’s leadership.
Is Now the Right Time to Invest in Tesla?
Honestly, I have mixed feelings about purchasing Tesla stock at this moment.
Autonomous driving technology presents an exciting opportunity. Tesla’s FSD software consistently generates revenue, which could potentially enhance the company’s cash flow and profitability. Ives’s recent price target of $400 suggests about a 25% increase from Tesla’s current stock price.
However, Tesla’s stock has surged nearly 30% since Election Day (Nov. 5). Investing in rapidly rising stocks is always fraught with risk, as many day traders may shift their focus elsewhere, sometimes leading to sudden sell-offs.
While some of the optimistic sentiment linked to the Trump-Musk relationship seems to be reflected in Tesla’s current stock price, a case can still be made for considering an investment today.
However, investors should be cautious not to get carried away. Although I remain hopeful about a positive influence from a Trump administration on Tesla, practicing restraint and patience is likely the wiser approach for now.
Don’t Miss Out on Future Investment Opportunities
Have you ever worried about missing out on investing in top-performing stocks? If so, pay attention now.
Our team of analysts sometimes issues a “Double Down” stock recommendation for companies poised for growth. If you’re concerned you’ve already passed your chance to invest, this is an ideal moment to consider your options before it’s too late. Historical performance illustrates the potential:
- Amazon: if you had invested $1,000 at our double down in 2010, you’d have $23,818!
- Apple: if you invested $1,000 at our double down in 2008, you’d have $43,221!
- Netflix: if you invested $1,000 at our double down in 2004, you’d have $451,527!
Currently, we are recommending “Double Down” alerts for three exceptional companies, and opportunities like this may not present themselves again soon.
See 3 “Double Down” stocks »
*Stock Advisor returns as of November 11, 2024
Adam Spatacco has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
