Written by Cláudio Afonso | LinkedIn | X
Tesla’s stock has jumped nearly 40% in the week following Donald Trump’s U.S. presidential election victory, a rally that “has surprised Deutsche Bank (and many investors),” the analyst Edison Yu said on Tuesday.
In a new research note, Yu commented on the “magnitude” of Tesla’s gains, which have added over $300 billion in market value and pushed the company’s market cap back above $1 trillion for the first time since early 2022.
The firm reiterated a Buy rating and a $295.00 price target on the stock.
Tesla shares closed 9% higher on Monday at $350, continuing its post-election surge as investor optimism builds around potential policy advantages for Tesla, Space X and other companoes led by Elon Musk under Trump’s second term.
However, the stock is trading 5% lower on Tuesday’s pre-market trading session. Deutsche Bank analyst Edison Yu reiterated a Buy rating and $295.00 price target on Tesla
“Similarly, we suspect the valuation of SpaceX also benefited materially. For context, the appreciation alone surpasses the combined market value of Ford + GM + Stellantis,” Yu noted.
“Leading up to the election, our sense was that a Trump victory was increasingly being perceived as a positive for the stock given Elon Musk’s very strong support of the campaign; however, the magnitude of the move over the past week has surprised us (and many investors),” he noted.
Yu attributed part of Tesla’s stock jump to short-term factors, including retail investor enthusiasm, algorithmic trading, and short-covering amid reduced negative catalysts.
“Beyond attributing the price action to tactical factors (e.g., retail exuberance, algos, short covering due to lack of near-term negative catalysts, etc.), we see potential large terminal value benefits to Tesla’s efforts in auto, robotaxi, and even humanoid robotics. How exactly will this manifest in a Trump administration? This may be more art than science at the moment, but we offer some initial thoughts,” he noted.
Last week, Bank of America raised the price target on the stock to $350 from $265 while maintaining a Buy rating on the shares.
BofA analyst cited that the company may benefit from a shift to federal regulation of autonomous vehicles and full self-driving (FSD) nationwide despite being “relatively indifferent directly to most policies.”
In his victory speech, Trump praised Tesla CEO Elon Musk, calling him a “new star” and “super genius”. “He’s a character, he’s a special guy, he’s a super genius,” Trump said, adding, “We have to protect our geniuses; we don’t have that many of them.”
The rally marks a significant recovery for Tesla, whose shares dropped from $313 in September 2022 to a low of $102 in January 2023, the lowest level since August 2020.
Written by Cláudio Afonso | LinkedIn | X
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