What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) jumped 8.9% in the afternoon session after Bloomberg reported that the Trump administration seeks to create a federal framework for self-driving cars. The framework is expected to simplify obtaining a self-driving license, potentially accelerating Tesla's ambitions of deploying more autonomous vehicles on the road. Tesla's autonomous vehicle business is one of its key growth bets and has led some Wall Street analysts to maintain bullish views. Wedbush analyst Dan Ives noted, "This would be a huge step forward in easing U.S. rules … and be a significant tailwind for Tesla's autonomous and AI vision heading into 2025."
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What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 98 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 15.1% after stocks rallied as Republican party candidate Donald Trump was declared the winner of the 2024 US presidential election. The market is trying to assess the impact of some of the anticipated changes under the new administration, mostly relating to trade decisions which affect semiconductor and defense stocks, regulatory measures in the crypto and energy industries, and the broader impact on key economic indicators tracked by the Fed, mostly notably inflation.
For Tesla, President-elect Trump is considered an Elon Musk ally. The stock's price action suggests investors are tempering their worries about potential new regulatory measures set to be introduced in the electric vehicle market, including the elimination of purchase tax credits.
Tesla is up 36.9% since the beginning of the year, and at $340.07 per share, it is trading close to its 52-week high of $350 from November 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $14,189.
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