Tesla Shares Soar to Two-Year High on Hopes of Trump Administration Boost
Investors are flocking to Tesla, driving the electric car maker’s shares to their highest level in over two years. The surge in confidence comes on the heels of Donald Trump’s presidential win, with many betting that CEO Elon Musk’s close ties to the president-elect will bring benefits to the company.
Musk’s Ties to Trump Spark Optimism
Musk has been a vocal supporter of Trump, contributing at least $119 million to a pro-Trump spending group. His business ventures, including SpaceX and Neuralink, rely heavily on regulation, subsidies, and policy, making a friendly administration a significant advantage.
Options Trading Hits Fever Pitch
Tesla’s contracts were the most heavily traded options on individual stocks on Monday, with over 2.5 million contracts changing hands by noon – more than twice the usual pace. The focus is on near-term contracts, with options expiring by Friday making up about 56% of the total trading volume. Analysts note a heavy concentration of call contracts at the $400 level, some 13% above the stock’s current price.
Wedbush Securities Raises Target Price
On Monday, Wedbush Securities raised its target price on Tesla shares to $400 from $300, citing the Trump White House win as a “gamechanger” for the company’s autonomous and AI story over the coming years.
Options Action Fuels Stock Price
The bullish options action is likely contributing to the stock’s rise, as options dealers who sold upside contracts react to the soaring stock by buying more shares to cover their own risk. However, some analysts warn that the growing cost of Tesla call options could attract sellers, potentially pressuring the stock down if it fails to keep up with its recent moves.
Tesla’s Future Looks Bright
As investors continue to pile into Tesla, the company’s future looks increasingly promising. With Musk’s close ties to Trump and the potential for regulatory benefits, the electric car maker may be poised for significant growth in the coming years.
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