Tesla surges as Trump ties boost investor confidence
Tesla is experiencing a notable increase in after-hours trading, driven by the growing likelihood of Donald Trump winning the presidential election. Investors are betting that Elon Musk's strong relationships with the former president may provide advantages to electric vehicle manufacturers.
Tesla’s stock surged 8% in overnight trading on the Robinhood platform. This marks a clear rebound after a series of six consecutive declining sessions. On Tuesday, the shares rose by 3.5% during regular trading, according to CNBC.
Musk's political engagement
The rise follows the disclosure of Elon Musk's significant involvement in Trump's election campaign. In October, Tesla’s CEO contributed nearly $75 million to America PAC, a political committee he established earlier this year to support the Republican candidate.
Investors find particular significance in Donald Trump's announcement that he would appoint Musk as head of the Government Efficiency Commission if elected. During an October rally at Madison Square Garden, Trump proposed reducing federal spending by $2 trillion.
Prospects for the company
The uptick in stock prices is especially noteworthy given that Trump is not typically seen as a supporter of the clean energy sector, which includes electric vehicle manufacturers. Since the beginning of the year, Tesla's shares have underperformed the broader market, gaining only 1.2% compared to a 21.2% increase in the S&P 500 index.
Analysts point out the paradox of the situation—despite Trump's potentially unfavourable policies for the electric vehicle industry, investors believe Musk's personal connections with the former president could lead to tangible business benefits for Tesla. At a recent rally, Musk pledged to "free entrepreneurs from excessive government control and reduce tax burdens."
Tesla's reaction to the U.S. election is among the strongest in the market. There are also notable changes in currency and cryptocurrency rates, oil prices, and bond yields.
