They say that the rising tide lifts all boats.
But it makes perfect sense that, now that the stock market is surging, we will see industry leaders that have got the pulse of America, such as Elon Musk, benefiting the most.
In fact, the Tesla CEO’s ‘all-in’ support for Donald Trump’s Presidential campaign is actually proving so successful that ‘a veritable chasm has opened up between his EV manufacturer and the rest of the auto industry’.
Fortune reported:
“As conventional carmakers trade at rock-bottom prices amid a broad industry malaise brought on by China’s economic slowdown and growing fears of Trump tariffs, Tesla’s stock continues to soar, creating one of the biggest valuation gaps it’s ever seen.
On Friday, Tesla reclaimed its place in the elite club of companies worth more than $1 trillion after adding a full third in market capitalization since Election Day less than a week ago. The last time Tesla was worth this amount of money it was April 2022, Musk had just revealed his $44 billion plan to acquire Twitter.”
Musk made a very risky bet on Trump in the sense that he opened himself to retaliation by the deranged Dems, but in the end, it paid off big time.
In comparison to its carmaker peers, Tesla is now worth more than the next 15 largest companies combined.
Yes, you read it right.
Analysts believe that the recent Tesla’s gains are a result of expectations about Trump tax cuts – maybe even a corporate tax rate cut from 21% down to 15% for U.S. manufacturers like Tesla.
“David Sacks, like Musk a member of the PayPal mafia who supported Trump, had a simpler explanation for why the stock soared after the election. Musk’s influence in Trump’s second administration would defang regulatory enforcement by agencies like the traffic safety authority NHTSA and put a swift end to investigations into Musk’s business dealings.
‘That was the lawfare discount — the stock market pricing in the viciousness of Democrats’, Sacks posted on Friday.”
With Tesla’s 2025 earnings per share at $3.24, investors are right now paying 100 times earnings for each share.
Just compare that to versus 5.3 times for a General Motors.
It is considered that a ‘100 earnings multiple’ means that stocks have lost the connection to their underlying fundamentals, so we better keep an eye on it.
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