The Surprising Link Between Politics and Stock Performance
Election Outcomes Have a Lasting Impact on the Market
The 2024 election results had a profound effect on the stock market, particularly for Tesla (TSLA) shareholders. After a dismal 2022, Tesla’s stock more than doubled in 2023, adding a staggering $506 billion to its market value. This remarkable turnaround had a significant impact on investors, including the company’s CEO, Elon Musk.
Musk’s Windfall: A $111 Billion Gain
As Tesla’s largest shareholder, Musk’s stake in the company rose by $111 billion last year. Interestingly, nearly 98% of this gain occurred after Election Day, when Musk began to publicly associate with Donald Trump. This timing has raised questions about the potential influence of politics on the stock market.
The Trump Effect: A Boost to Tesla’s Share Price?
While it’s impossible to quantify the exact impact of Trump’s election on Tesla’s stock price, it’s clear that Musk’s increased public profile during this period didn’t hurt the company’s shares. In fact, Musk’s $109 billion gain from Election Day to year-end 2024 far surpasses the $277 million he spent to support Trump’s campaign.
Musk’s Diverse Portfolio: A Key to His Success
Tesla’s stock surge was just one aspect of Musk’s remarkable year. His wealth increased by $203 billion, according to the Bloomberg Billionaires Index, driven by gains in his other assets, including Space X, xAI, and The Boring Company.
The Broader Impact: A Boon for S&P 500 Investors
The Tesla effect wasn’t limited to Musk and direct shareholders. Investors with money tied to the S&P 500 index gained $87 billion last year, thanks in part to Tesla’s strong performance. This translates to a nice return for those invested in S&P 500 index funds, total stock market index funds, or actively managed funds with significant Tesla stakes.
What’s Next for Tesla?
As Tesla faces its first sales decline in a decade, the company’s future performance is uncertain. Will it repeat its 2024 success or experience a downturn like 2022? One thing is clear: Tesla remains a company worth watching, regardless of the political landscape.
Understanding Musk’s Wealth Calculation
When calculating Musk’s wealth, it’s essential to consider the nuances of his Tesla holdings. With over 40% of his shares tied to options, the calculation involves subtracting the option price from the shares’ value. This complexity is reflected in the $282 billion figure used to represent Musk’s Tesla stake.
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