Tesla Inc. (TSLA) surged over 13% on November 6 after the US election results, and achieved a jaw-dropping 41.59% gain in the past five days, climbing from $247.20 to $350. Now, with a market cap exceeding $1 trillion, Tesla is valued higher than Toyota, Volkswagen, BYD, Daimler, GM, BMW, Ford, and Honda all combined.
While TSLA has frequently flashed on DeepCap AI’s radar as a high-potential stock, we’ve consistently resisted adding it to our DeepList. Tesla’s wild volatility has always kept us at a distance.
The Story Analysts Are Selling
Some analysts justify TSLA’s meteoric rise with two main narratives:
- AI Ambitions: With its Dojo supercomputer and talk of robotaxis, Tesla is pitched as an AI juggernaut poised to rival Nvidia.
- Political Influence: Elon Musk’s ties with Donald Trump, including a significant $118 million donation, give him a direct line to the former president, potentially bending federal policies to favor Tesla.
Yet, few mention the contradictions: Trump’s pro-fossil-fuel stance could undermine the green policies that have buoyed EV demand. His pledged tariffs on China and Europe could further challenge Tesla’s global market. Tesla’s valuation looks divorced from its fundamentals, especially under a potentially less EV-friendly administration.
Musk’s Political Leverage
Musk’s influence with Trump appears significant. Reports suggest that Musk may even lead a new “Department of Government Efficiency” to review federal spending, aiming to cut regulations, some of which could benefit Tesla. Musk’s recent public gestures, such as supporting the #EndTheFed movement and meetings with other political leaders, show his sway extends beyond business and into the halls of power.
FOMO Fuels the Fire
All this hype has FOMO in full effect. The market’s irrational exuberance is running high, with every uptick in TSLA’s price luring in more investors, who fear missing the next rally.
Our Take
TSLA is a perfect stock for gambling. The risks are high, and so are the payoffs, but the game is skewed and the dice aren’t fair. For the same reasons we stay away from options trading and leveraged financial instruments – low probabilities and so little room for error – we’ll be staying away from TSLA.