Tesla (NASDAQ: TSLA) CEO Elon Musk’s political affiliation with President-elect Donald Trump is leading to optimism among investors, which has contributed to an upward revision of the company’s stock projection.
Morgan Stanley’s (NYSE: MS) Adam Jonas has revised his target for TSLA, pointing to a possible $500 bull case for the electric vehicle (EV) manufacturer.
In an investor note on November 12, Jonas stated that following Musk’s support for Trump, investor sentiment around the EV maker has shifted.
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“Elon Musk’s entry into the political sphere has expanded investor thinking around Tesla’s fundamental outlook,” Jonas said.
This has driven a 40% rally in its stock and pushed shares to a two-year high. Notably, the short-term movement has surpassed Morgan Stanley’s previous $310 price target.
According to Jonas, Musk’s political involvement has broadened investor perspectives on Tesla’s potential role within the U.S. renewable and autonomous industrial landscape.
“With the current share price around $350 in intraday trading, TSLA shares are now trading at approximately 16x EV/EBITDA on our FY30 forecasts, up from around 11x last week. At $400, the stock would trade at 19x EV/EBITDA (FY30e), and a $500 price would bring the valuation just below 24x,” Jonas added.
More upside targets for TSLA share price after Trump’s win
Wedbush Securities’ Dan Ives also shared a bullish outlook for Tesla under the Trump administration.
According to the analyst, artificial intelligence and autonomous technology will likely thrive during the next administration, markets he believes represent $1 trillion for Tesla. To this end, Ives raised the Tesla share price target from $300 to $400.
“We are raising our price target on Tesla to $400 from $300 as we believe the Trump White House win will be a game-changer for the autonomous and AI story for Tesla and Musk over the coming years. We estimate the AI/autonomous opportunity is worth $1 trillion alone for Tesla,” Ives said.
As reported by Finbold, Ives noted that Tesla faces further growth potential, banking on its dominance in the EV sector. The analyst stated that Tesla will likely be least impacted even if Trump moves ahead with scrapping the federal tax cuts for the EV space.
What next for Tesla stock
At the close of the latest trading session, Tesla was valued at $350, ending the day up almost 9%. In the past week, the share price has rallied over 40%.
Interestingly, Tesla has been on a tear, considering that Bank of America (NYSE: BAC) recently set the $350 price as a street-high.
Heading into the November 12 trading session, the stock appears to be cooling down, dropping 1.1% in pre-market trading.
From a technical outlook, TrendSpider’s analysis on November 12 indicated that TSLA has the potential to sustain its current momentum, having formed the bullish classic “cup” pattern.
The equity’s breakout from the $280-$290 resistance range, where it previously struggled, shows strong buying interest. If momentum persists, TSLA could test its previous all-time high of $414.50.
Indeed, Tesla’s rally has had notable casualties in the form of short sellers. Since Trump’s victory, short sellers have lost about $7.8 billion, with analysts warning that more pain could be ahead.
“We expect continued short covering in TSLA stock due to the rally-induced short squeeze, which will force out many of the 2.4 million shares we saw shorted over the last month,” S3 Partners’ managing director, Ihor Dusaniwsky, said.
In summary, Tesla is generally in a good place, but investors need to exercise caution, especially if the Trump election euphoria fades. Additionally, Tesla’s Q4 report should be of interest, considering that the company’s sales in China disappointed in October.
Featured image via Shutterstock
