Tesla Stock Surges After Donald Trump Endorsement

Tesla stock reacted positively to Donald Trump’s endorsement of the brand yesterday.

With shares having closed at $230.58 on Tuesday, they opened around seven percent higher on Wednesday morning, according to Yahoo Finance.

Tesla gained 3.8 percent on Tuesday, after shedding 15 percent on Monday as U.S. stocks across the board responded to President Trump’s evasive comments on the possibility of a recession.

On Tuesday, Tesla delivered five vehicles to the White House South Lawn, which Trump inspected before issuing another warning to those protesting Musk’s involvement in the administration at dealerships across the country.

On Monday, Trump took to Truth Social to declare these protests at Tesla dealerships “illegal and collusive,” and promised to purchase a “brand new Tesla [Tuesday] morning as a show of confidence and support for Elon Musk, a truly great American.”

Why It Matters

Tesla’s stock has been in the doldrums in recent weeks, attributed to increased foreign competition, sluggish sales and the alienating effects of the CEO’s political activities on its customer base.

Trump’s strong endorsement of a brand owned by a political ally and advisor has already sparked ethical concerns from critics, who have compared it to a “government bailout” and accused him of misusing the president’s public platform.

What To Know

Tesla stock has been struggling since Trump took office, having ridden a post-election rally to an all-time high price of $479.86 in December.

Prior to markets opening on Wednesday, the stock was down 39 percent in the year-to-date, and had fallen 46 percent since the inauguration.

While Trump’s backing could give the company a much-needed boost, the full-throated endorsement of a private company potentially breaches ethical guidelines governing the conduct of government employees.

According to the Office of Government Ethics, an independent agency within the executive branch, a federal employees may not use “public office for his own private gain, for the endorsement of any product, service or enterprise, or for the private gain of friends, relatives, or persons with whom the employee is affiliated in a nongovernmental capacity endorsement of any product, service or enterprise, or for the private gain of friends, relatives, or persons with whom the employee is affiliated in a nongovernmental capacity.’

What People Are Saying

Speaking to reporters on Tuesday, Elon Musk said: “As a function of the great policies of President Trump and his administration, and as an act of faith in America, Tesla is going to double vehicle output in the U.S. within the next two years. Double.”

When asked whether his purchase of a Tesla would boost the company’s sales and share price, President Trump said: “Well I hope it does.”

Following Trump’s endorsement, Fox News host Sean Hannity posted: “Tesla is the MOST American made car in the country! #AmericaFirst #AmericanJobs!!”

Democratic Senator Chris Murphy, reacting to a video of Trump and Musk entering a Tesla on Tuesday, wrote: “Just because the corruption plays out in public doesn’t mean it’s not corruption.”

MSNBC’s Chris Hayes referred to Trump’s endorsement of the car company and his warning to protestors as “a government bailout of sorts.”

What Happens Next?

Despite declining sales and sluggish stock performance, many analysts remain optimistic about Tesla. In a recent note cited by Investing.com, Morgan Stanley analysts stated that the company is well-positioned to secure a significant share of the growing market for autonomous vehicles and AI-powered robotics.

During the company’s late January earnings call, Musk said: “I see a path of Tesla being the most valuable company in the world by far,” adding: “There is a path where Tesla is worth more than the next top five companies combined.”