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Shares of electric vehicle (EV) maker Tesla (TSLA) jumped more than 14 percent in early trading Wednesday as traders bet that the company could benefit from CEO Elon Musk’s backing of President-elect Donald Trump.
Trump was projected to be the winner of the presidential election after voting results in Wisconsin put him over the 270 electoral votes necessary to win, according to the Associated Press. Republicans also won control of the U.S. Senate, while the majority in the House of Representatives remains up in the air.
Trump praised Musk in his election night speech, calling him a “star” and a “super genius.”
Musk endorsed Trump in July and donated nearly $120 million toward his campaign, according to The New York Times. In the leadup to the election, Musk appeared at campaign rallies with the former president, where he highlighted the need for deep cuts to government spending.
It’s still unclear what role Musk may take on in the Trump administration, but Trump has said he would appoint Musk to oversee government efficiency.
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Musk is the richest person in the world, according to Bloomberg, and his business interests include Tesla, SpaceX, X (formerly known as Twitter), xAI and more. His stake in Tesla, worth over $100 billion, is his largest asset as of November 2024.
How Tesla will benefit from Trump’s second term is uncertain, but traders are betting that Musk’s support of the former president will be rewarded. An end to subsidies for the electric vehicle industry could hurt other EV makers more than Tesla because of the company’s size, according to analysts, while higher tariffs on Chinese EV companies would ensure that cheaper competition doesn’t come to the U.S.
Tesla shares are up about 12 percent so far in 2024, compared to a roughly 23 percent increase for the S&P 500.
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