Tesla hits US$1 trillion market value as Musk-backed Trump win fans optimism

TESLA’S market value breached the US$1 trillion-mark in a sharp rally on Friday (Nov 8), on growing bets of a favourable treatment for CEO Elon Musk’s companies in return for his support for President-elect Donald Trump in his poll campaign.

The electric automaker’s shares rose more than 6 per cent to a more than two-year high of US$315.56, after having gained 19.3 per cent up to Thursday’s close. The company crossed the US$1 trillion valuation for the first time in more than two years.

The billionaire could push for favourable regulation of autonomous vehicles that Tesla plans and also get the US National Highway Traffic Safety Administration to hold off on potential enforcement actions involving the safety of Tesla’s current driver-assistance systems, a source had told Reuters.

Musk has focused on self-driving vehicle technology, ditching plans to build an economy car priced at under US$30,000. However, development and regulatory hurdles have delayed the commercialisation of such technologies.

“Tesla and CEO Elon Musk are perhaps the biggest winners from the election result, and we believe Trump’s victory will help expedite regulatory approval of the company’s autonomous driving technology,” said Garrett Nelson, senior equity analyst at CFRA Research.

Tesla shares jumped in late October after the company reported a rise in quarterly profit margin, buoyed by sales of the highly profitable Full Self Driving driver assistance software.

It has been the world’s most valuable automaker for years, with Japan’s Toyota Motor, China BYD and others trailing by several hundred billion US dollars.

Tesla shares trade 93.47 times its 12-month forward earnings estimates, compared with 38.57 for AI chip giant Nvidia, Microsoft’s 30.77 and Ford’s 6.29. REUTERS