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    • Tesla shares fall 5% as the Musk-led company cools post-election
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    Tesla shares fall 5% as the Musk-led company cools post-election

    Vaseline Posted on

    Topline

    Shares of Tesla fell on Tuesday as part of a broader cooldown among the hottest trades following Donald Trump’s election last week, although the Elon Musk-led electric vehicle maker remains far more valuable than before Election Day.

    Key facts

    Tesla shares fell 5% by early afternoon, on pace for their first daily loss since last Monday.

    That brings Tesla’s post-election gain down to a still-eye-popping 33%, as investors flocked to the stock after Trump’s victory on optimism about what Musk’s close alliance with Trump would mean for Tesla.

    “The magnitude” of the post-election surge in Tesla shares “surprises us,” Deutsche Bank analysts led by Edison Yu noted in a note to clients on Tuesday.

    Tesla’s misstep on Tuesday was accompanied by losses for a number of other assets, which recovered after Trump’s victory.

    The world’s largest digital asset Bitcoin fell 1%, cryptocurrency exchange Coinbase lost 4%, shares of Axon Enterprise, the parent company of Taser stun gun that was the only S&P 500 company to outperform from Election Day through Monday than Tesla, fell 3%, private prison companies CoreCivic and Geo Group fell about 6% each and analytics-focused defense contractor Palantir fell 2%.

    The major indexes fell only slightly, with the S&P and tech-heavy Nasdaq both losing about 0.2%.

    Crucial quote

    “Elon Musk’s rise from a political ‘outsider’ to a voice in potential policy could, at some level, accelerate Tesla’s journey beyond the auto sector,” Morgan Stanley analyst Adam Jonas wrote in a note to clients on Tuesday. American leadership in Tesla’s core ambitions, such as electric and autonomous vehicles, solar energy and robotics, “will involve government-industry partnerships on a scale that some compare to the Manhattan Project, the US Highway Act or the Apollo missions ”Jonas added.

    Forbes rating

    Musk’s net worth fell by about $9 billion on Tuesday as Tesla shares fell. His net worth of $311 billion is still more than $75 billion higher than that of the second richest person in the world, Oracle Chairman Larry Ellison, while Musk is still almost $50 billion richer than before the election.

    Important background

    Tesla added more than $340 billion in market value in the week ending Monday, eclipsing a $1 trillion market cap for the first time since April 2022. Yu outlined several short-term factors behind the surge, including “retail exuberance” and the decline in short-term trading “due to a lack of short-term negative catalysts.” But Yu wrote that there are “potentially big” benefits for Tesla under a Trump administration with Musk as a close adviser, including “streamlining” regulatory approval of Tesla’s self-driving cars and the potential for Tesla to gain further market share in the US to secure potential reduction in federal tax credits for electric vehicles. Tesla shares led a broader rally for US stocks since the election, with the S&P rising 4% last week to trade above 6,000 for the first time, as Wall Street celebrated the positive earnings impact of lower corporate tax rates backed by Trump.

    Read more

    ForbesElon Musk now $50 billion richer after the election, with Tesla holding another 9% in stockBy means of Derek Saul
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