Tesla's Stock Rally Post-Trump Election Victory

Investing.com — The recent rally in Tesla (NASDAQ:TSLA) shares after Donald Trump’s electoral victory is likely to continue this week, according to Paige Hanson, Industrials Sector Specialist at JPMorgan.

Tesla stock jumped 9% on Monday, extending its significant rally from last week driven by Trump’s stunning win over Kamala Harris.

But even before the election results, Tesla shares were on a “glide path” toward the $300 mark, following what many perceived as “a thesis-changing earnings print/forward guide,” Hanson notes.

Specifically, the electric vehicle (EV) giant’s latest earnings print indicated that gross margins are expected to bottom in Q4, setting the stage for potential positive estimate revisions after several quarters of negative trends.

Tesla is also the only automotive manufacturer anticipated to experience significant production growth next year, according to its 2025 deliveries growth guide. This has prompted hedge funds and long-only investors to adopt a more neutral or positive stance toward Tesla's outlook, marking a notable shift from the previously negative consensus.

Hanson attributes the change in investor perception to Tesla's underrepresentation in long-only portfolios for several years and its popularity as a short position among hedge funds.

She also points out that the technical upward pressure is likely to intensify as long-only investors transition from neutral to potentially overweight positions, and as hedge funds cover their shorts.

Following the election results, investors now categorize Tesla as a “must-own stock,” contrasting sharply with the previous two years when the company faced weak EV demand and struggled with gross margin normalization and earnings misses.

Therefore, the technical upward pressure “is even further exacerbated post-election results,” Hanson stated.

Over the weekend, further discussions emerged about Tesla's status as a "Trump Trade," with expectations of continued technical upward pressure from short covering.