Tesla shares rise premarket, pointing to extension in post-election rally

Investing.com - Shares in Tesla (NASDAQ:TSLA) jumped by more than 6% in premarket US trading on Monday, pointing to an extension in a post-election rally in the electric vehicle giant.

The stock spiked by 8.2% on Friday, pushing Tesla's market valuation above $1 trillion, fueled by wagers that the company and its Chief Executive Elon Musk would be major beneficiaries of Trump's second four-year term in the White House.

Musk had been an outspoken backer of Trump during the campaign, lauding the former president at events and contributing over $130 million to his re-election bid. Trump, for his part, has praised Musk's talents as a businessman and suggested he could play a role as "Secretary of Cost-Cutting" in the new administration.

Prior to the election last week, which Trump won handily on a policy platform that included deep corporate tax cuts and looser regulation, Tesla's shares had risen by only around 1% so far this year. By the end of Friday, they had gained around 30% during that period.

Tesla's market cap previously crossed the $1 trillion threshold in 2021. It is now back among a group of megacap firms that includes artificial intelligence-chipmaker Nvidia (NASDAQ:NVDA), software titan Microsoft (NASDAQ:MSFT) and Google-parent Alphabet (NASDAQ:GOOGL).

Speaking to analysts after Tesla's last quarterly earnings, Musk suggested he could use his influence in the Trump administration to push for a "federal approval process for autonomous vehicles." Musk has argued that the current process, which is handled by individual states, presents a regulatory hurdle for Tesla. The firm has recently targeted autonomous driving as a new growth engine.

On Monday, analysts at Wedbush led by Daniel Ives raised their price target for Tesla to $400 from $300 and maintained their "Outperform" rating of the stock.

"[W]e believe the Trump White House win will be a gamechanger for the autonomous and AI story for Tesla and Musk over the coming years," Ives wrote.

"We estimate the AI and autonomous opportunity is worth $1 trillion alone for Tesla and we fully expect under a Trump White House these key initiatives will now get fast tracked as the federal regulatory spiderweb that Musk&Co. have encountered over the past few years around [full self driving]/autonomous clears significantly under a new Trump era."