Tesla's Stock Soars with Musk’s Role in Trump’s New Admin

Tesla Inc. (TSLA:US) shares have surged over 13% within the last 5 days, spurred by optimism around CEO Elon Musk’s close ties with President-elect Donald Trump. Investors are speculating that Trump’s administration may favor Musk’s ventures, including Tesla, SpaceX, and Neuralink, potentially reducing regulatory hurdles and fostering growth. The stock's recent rally, with a 28% increase since Trump’s victory, has positioned Tesla to approach a trillion-dollar market valuation, potentially adding up to $87 billion to its market cap.

Musk, a notable supporter of Trump, has contributed over $119 million to his campaign, securing a unique role in the new government as the “government efficiency czar.” He has been appointed to lead the Department of Government Efficiency (D.O.G.E.), alongside businessman and political figure Vivek Ramaswamy. Their mission is to dismantle government bureaucracy, cut wasteful spending, and streamline federal agencies. Trump has likened this initiative to a modern-day “Manhattan Project,” intending to achieve significant government reform by July 4, 2026, marking the 250th anniversary of the Declaration of Independence.

This collaboration between Musk and Ramaswamy is part of Trump’s broader “Save America” movement, aimed at making the government more accountable to the people by slashing a substantial portion of the $6.5 trillion in government spending. The market’s positive reaction to Musk’s new role reflects investor confidence that Tesla’s regulatory challenges may ease under the Trump administration’s pro-business stance. However, some analysts, including Susannah Streeter of Hargreaves Lansdown, caution that Tesla could face legal scrutiny around "preferential treatment" due to Musk's prominent position.

Despite Trump’s well-known skepticism towards electric vehicles, which may pose some risks to EV incentives, the market remains optimistic. The surge in Tesla’s stock price and an all-time high in call option volume 4.7 million contracts traded in a single day underscore investor enthusiasm. Yet, analysts also warn that Tesla's valuation, currently trading at 102 times forward earnings, remains high, and potential profit declines could limit growth. Nonetheless, CT Musk’s influential role within the new administration has investors banking on a favorable path forward for Tesla and his other ventures.

Tesla's rally under Musk's alignment with the new administration not only fuels optimism for the company’s future but also sparks curiosity about its impact on politicians with Tesla investments. Let’s see how they time their trades now that Elon is moving actively in their circle.