3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Discussing cult stocks, Cramer talked about Tesla, Inc. (NASDAQ:TSLA) and said:
“This rally since the election is one for the ages. It’s a movement, in retrospect, everyone should have seen coming, right? I mean, why not? Elon Musk has been all in with the winner of the presidential election. Their electric cars are doing much better than everyone else’s. Full self-driving could be around the corner. But now let’s look at what might have kept you out of the stock. If you go back in time to when we found out that Elon was a big-time Trump supporter, the media was filled with how long will that last chatter. The president-elect is famously mercurial while Elon Musk is obviously brilliant but equally arbitrary and capricious. The idea that these two could bond in any way before they clash seemed inevitable.
Plus, electric vehicle sales, they were sinking everywhere. We saw adoption slow for all EVs, including Tesla in the United States. The competition in China, it became cutthroat. Musk’s Tesla is a relatively high-cost producer. Numbers, the estimates, they kept going lower. Plus, there was this lawsuit about him getting his bonus where it wasn’t clear that he’d stick around as CEO if he lost… Now, of course, the reality turned out to be quite different, but it was easily missed by the numbers guys on Wall Street. First, the public is back into the stock market, bigger than ever. The public doesn’t listen to Wall Street research. Many don’t even know what it is. Others think it’s worthless.
The public knew one key thing that the analysts didn’t: Musk was incredibly close to Trump, spent hundreds of millions to helping them win. So as long as Trump won, Tesla was gonna be a huge winner. You had to be on board. You had to believe it was like a sports team. As it is, it turns out Tesla has more data on self driving than Google-backed competitor Waymo. Data that Trump will buy into maybe and crown Tesla the full self-driving winner versus the piecemeal city-by-city approach of Waymo. Maybe he gives him the whole interstate highway system, I don’t know.
It also helped that GM dropped out of the self-driving taxi business, making Musk’s view more of a reality. Tesla’s much more than just a vehicle company. It’s a tech company on wheels. Of course, Tesla’s up 86% for the year with nearly all of that coming after the election when we realized that not only is Musk tight with President-elect Trump, he is helping reform the government to Trump’s liking. Once you get a CEO with that kind of political influence, it’s easy for the faithful to imagine the unlimited possibilities, which means they’re no longer constrained by the price-to-earnings multiple. They’ll pay anything for Tesla, much higher than these prices. They’re actually insensitive to price. Oh, and did I mention that brokerage firm Mizuho just upgraded the stock from hold to buy off of an improving outlook under the Trump administration a few minutes after the market close?”
Tesla (NASDAQ:TSLA) stock has risen significantly after the U.S. presidential election, driven by strong financial growth and CEO Elon Musk’s relationship with President-Elect Trump. This was boosted by Musk’s appointment to a government efficiency role and reports that Trump’s team would focus on self-driving vehicle regulations. Tesla also made strides in autonomy with the release of version 13 of its Full Self-Driving software, moving closer to fully autonomous vehicles.
On December 16, Mizuho analyst Vijay Rakesh raised the stock’s rating to Outperform from Neutral, increasing the price target to $515 from $230. The firm believes Tesla’s autonomy software is advancing towards widespread commercialization and sees a more flexible regulatory environment as favorable for the autonomous sector’s growth. Additionally, the firm suggests that new policies under the Trump administration, such as the repeal of consumer EV tax credits, will benefit Tesla by providing a more competitive EV cost structure compared to its peers.
Gene Munster, managing partner at Deepwater Asset Management, mentioned in an interview with Business Insider that autonomous vehicles in Western markets are likely to be driven by only a few companies, with Tesla (NASDAQ:TSLA) being one of the primary players. According to Munster, one of its key advantages in this race is its ability to scale autonomous services, given that millions of Tesla cars are already on the road.
He highlighted that the company’s data collection capabilities, which are crucial to the development of autonomous technology, are likely to outpace any hardware disadvantages Tesla may face. Anthony Levandowski, who co-founded Google’s self-driving car program, known as Waymo, also expressed confidence in Tesla’s autonomous vehicle potential, stating that the company is in a stronger position than Waymo.
Tesla’s large fleet of semi-autonomous vehicles, continuously collects data to improve technology. Levandowski believes Tesla’s vast data advantage, with millions of vehicles feeding real-time information, will be a key differentiator, potentially gathering 10,000 to 1 million times more data than Waymo across various driving scenarios.
