Tesla Motors shares closed up 3.1% at $426.50 on Friday, as investors reaped the final rewards of the so-called Trump bump ahead of Inauguration Day.
There’s a lot to look forward to after the day passes as Tesla Chief Executive Elon Musk’s buddying up to Donald Trump, which some have called a “bet for the ages,” could bring forth what investors really care about as soon as this year. And that’s not about electric cars.
Tesla’s stock powered up 6% in afternoon trading, to provide an $80.2 billion boost to the company’s market capitalization, which is currently at $1.41 trillion.
Since Trump’s election win, the stock has soared 74.5% to add $601.3 billion to Tesla’s market cap.
That is by far the biggest post-election increase in the market value of the “Magnificent Seven” technology giants. The second-biggest Trump bump to market cap was the $322.6 billion for Alphabet Inc., while Nvidia Corp. was the only one that lost value, in the order of $45.1 billion.
In comparison, the stock actually rose more between Election Day 2020 and President Biden’s Inauguration Day on a percentage basis, as it rocketed 99.2% during that time.
But, because of the 3-for-1 stock split enacted in August 2022, there are now more than triple the number of shares outstanding in 2021. That, coupled with a much higher stock price translating to a bigger dollar-price increase — $187.33 this time versus $140.22 last time — means the Trump bump to market cap has been more than four times that of the Biden bump of $132.9 billion.
What are Tesla investors so excited about this year as Trump takes office?
Morgan Stanley hosted a lunch on Thursday, and analyst Adam Jonas said the feedback he got from investors was “ABC,” or “anything but cars.”
For one, Jonas said investors are looking forward to tangible and measurable progress on full self-driving for Tesla’s Cybercab robotaxi business.
That was originally expected to be launched in early 2026, but there are hopes that those plans could be accelerated into this year under a Trump administration.
“There’s a high focus on Cybercab/robotaxi milestones as Tesla moves from ‘0 to 1’ cities deployed,” Jonas wrote in a note to clients.
“Elon Musk’s potential ability to accelerate Federal rule-making to encourage [autonomous vehicle] deployment” is seen as significant, if not difficult to predict, Jonas said.
Investors are also looking toward Tesla potentially hosting an “artificial intelligence” day, following last year’s robotaxi day. Jonas said the hope is that Musk will showcase a more advanced Optimus humanoid robot.
“Some investors believe humanoids may be Tesla’s most valuable business,” Jonas said, and are surprised to find out he doesn’t include any value for Optimus in his calculations of valuation.
Basically, investors are more excited about Tesla’s technology than its EVs. Particularly, they’re focusing on the overlap of generative AI and robotics, which Jonas refers to as “embodied AI,” and what Musk’s relationship with Trump can do to move that along.
That should continue to provide a tailwind to Tesla’s stock post-Inauguration Day, as Jonas said he believes there are still many investors and analysts who haven’t included the potential from “embodied AI” as they calculate valuations.
The stock has run up 103.6% over the past 12 months, while the S&P 500 index SPX has advanced 26.8%.