Tesla Inc. : Tesla crosses the $1,000 billion mark in market capitalization

(BFM Bourse) – The car manufacturer has not moved above this symbolic threshold since April 2022.

Donald Trump's victory in the US presidential election has galvanized Wall Street. On Friday, the Dow Jones and the S&P 500, for the first time during the session, exceeded the threshold of 44,0000 and 6,000 points respectively, supported by the prospect of tax cuts and deregulation for businesses.

The return of Donald Trump to the White House also brought a tenant of the S&P 500 index, namely Tesla, whose director Elon Musk is close to the Republican businessman. Tesla shares reacted clearly to Donald Trump's victory, gaining 15% last Wednesday after his favorite candidate easily won the American presidential election. The stock gained nearly 3% on Thursday then 8.2% on Friday, ending the week at $321.22.

Over the course of this election week, Tesla saw its action jump 29%, adding $230 billion in capitalization, the equivalent of the Japanese manufacturer Toyota on the stock market. This significant gain therefore allowed it to return above the key threshold of $1,000 billion in capitalization, to exactly $1,031 billion, according to companiesmarket.cap. The manufacturer is catching up with the other “Magnificent Seven” (Nvidia, Apple, Microsoft, Alphabet, Meta, Amazon) on Wall Street, which are moving clearly above this threshold.

Tesla's awakening even undermined selling strategies on the car manufacturer's shares initiated before the American presidential election, Bloomberg also reports. Hedge funds that took short positions in Tesla between Election Day and Friday's close suffered losses of at least $5.2 billion, according to Bloomberg calculations based on data compiled by S3 Partners.

Tesla stock was already on favorable momentum before the US presidential elections. It had increased by more than 20% over the last week of October, the market had been seduced by the announcements of Tesla which had indicated that it had achieved profitability significantly higher than expected and expected growth of 20 to 30% in its sales. automobiles from 20% to 30% next year.

A very notable return

The car manufacturer is therefore making its return to this very exclusive club of companies whose stock market valuation of all shares exceeds 1,000 billion dollars. Tesla has not moved above this threshold since April 2022.

Let us also remember that the company had already reached this milestone for the first time in October 2021. Before experiencing a difficult stock market performance, penalized both by the tightening of the monetary policy of the American Federal Reserve, but also by fierce competition from manufacturers Chinese. Over the first four months of 2024, Tesla even lost more than 40% due to increased competition from the Chinese player BYD, which took away the title of leading electric manufacturer in the world in the fourth quarter of 2023.

Donald Trump's victory therefore revives Tesla, which thus consolidates its position as the 9th largest market capitalization in the world. The group thus exceeds Berkshire Hathaway, Warren Buffett's conglomerate, which also crossed the 1,000 billion capitalization mark at the end of August, by a few tens of billions of dollars in capitalization.

A winning return for Tesla

Markets believe that the relationship between Musk and Trump could favor Tesla as well as the billionaire's other activities, like Space “We believe Trump's victory will help accelerate regulatory approval of the company's self-driving technology,” Garrett Nelson, an analyst at CFRA Research, was quoted as saying by Reuters.

“The biggest benefit of a Trump victory would be for Tesla and Musk. We believe a Trump presidency would be negative overall for the electric vehicle industry, as it is likely that rebates/tax incentives for this type of powertrain be deleted,” Dan Ives, an analyst at Wedbush, explained on Wednesday.

The increase in customs duties desired by Donald Trump on European and Chinese imports would also protect Tesla, underlines the specialist. “But for Tesla, we see this as a huge positive. Tesla has unmatched scale and reach in the electric vehicle industry and this dynamic could give Musk and Tesla a clear competitive advantage in a vehicle subsidy-free environment. electric vehicles, coupled with likely higher Chinese tariffs that would continue to push out cheaper Chinese electric vehicle players (BYD, Nio, etc.) from flooding the US market in the years to come,” he continued.

Tesla has therefore overtaken the broker comparator Bestbrokers.com. This site compiled this summer a list of companies likely to exceed 1,000 billion dollars. Tesla was clearly not in the good books of Bestbrokers.com, which estimated that this symbolic bar would not be crossed before March 2029.

Sabrina Sadgui – ©2024 BFM Bourse