Tesla (TSLA) stock rallied hard on the price charts following the electric vehicle (EV) maker's blowout earnings last month, rising more than 25% from October 23 to October 25. However, shares have been in a downtrend ever since – currently headed toward a six-day losing streak – which could be due to CEO Elon Musk actively participating in the Republican presidential campaign.
Musk has been campaigning for former President Donald Trump and formed the America PAC to support values that the two agree on, including secure borders, sensible spending and free speech. Trump has stated that if he is re-elected, he will create a government efficiency commission dedicated to sensible spending and it will be led by Musk.
However, while Musk and Trump align on many major issues, there are question marks surrounding how a Trump presidency would impact Tesla.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"We believe a Trump presidency would be an overall negative for the EV industry as likely the EV rebates and tax incentives get pulled," says Wedbush Daniel Ives. But for Tesla, Ives sees a Trump win as a potential positive with some caveats.
"Tesla has the scale and scope that is unmatched in the EV industry, and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled with likely higher China tariffs that would continue to push away cheaper Chinese EV players from flooding the U.S. market over the coming years," Ives notes.
In the case of a Harris win, Ives expects the EV tax credits will remain in place "and ultimately increased in 2025 as the goal to get more U.S. consumers towards EVs would be a laser focus in a Harris administration."
Wedbush has an Outperform (Buy) rating and $300 price target on TSLA stock.
Is Tesla stock a buy, sell or hold?
Tesla's latest losing streak has the shares trading in negative territory for the year to date and Wall Street is staying on the sidelines when it comes to the Magnificent 7 stock.
According to S&P Global Market Intelligence, the average analyst target price for TSLA stock is $222.68, representing a discount of more than 9% to current levels. Meanwhile, the consensus recommendation is a Hold.
Financial services firm CFRA Research has a Hold rating on Tesla, but raised its price target to $265 from $225 following its third-quarter earnings results.
"We raise our target in the aftermath of the company's Q3 earnings release and conference call, recognizing the willingness of investors to pay higher multiples for TSLA shares due to increased excitement related to the company's longer-term growth prospects," said CFRA Research analyst Garrett Nelson in an October 28 note.
The consumer discretionary stock's valuation has always been a pain point for analysts, Nelson says, with "bears arguing that the stock has been unjustifiably overvalued relative to auto industry peers for many years. We have long argued that TSLA should instead be valued as a 21st century, sustainable transportation, energy, and technology company and therefore valuation is more arbitrary."
Related Content
-
Four Financial Shocks Retirees Face and How to Avoid ThemTurn these financial shocks into mere "bothers" with a little foresight and preparation.
-
Time to Spring-Clean Your Finances: A Financial Professional's Four Steps to Tidy Them UpA midyear review of everything from spending to saving, with adjustments as needed, can set you on track to financial security. Plus, don't forget to check in on your workplace benefits.
-
Time to Spring-Clean Your Finances: A Financial Professional's Four Steps to Tidy Them Up
A midyear review of everything from spending to saving, with adjustments as needed, can set you on track to financial security. Plus, don't forget to check in on your workplace benefits.
-
Why a Law Firm Secretly Recording Client Conversations Is Wrong (and Illegal)A law firm that has been recording client conversations without the clients' knowledge or permission and has threatened employees if they speak out faces legal and ethical challenges.
-
Stock Market Today: Markets Discount Another U.S. DowngradeAfter Friday's closing bell, Moody's followed Standard & Poor's and Fitch and cut its rating on U.S. government debt.
-
Donating Complex Assets Doesn't Have to Be ComplicatedIf you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
What's Next for Stocks After a Chaotic SpringA chaotic tariff policy buffets investors looking for clarity on the economy and inflation.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? WrongThe wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term CareMany people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Where to Invest in an Uncertain MarketIn an uncertain market, you can still pocket juicy payouts ranging from 4% to 14%, depending on risk.
