TOP STORY
📈 Tesla Soars 73% Since Trump Win to All-Time Highs

📰 Last week, I reported on Bitcoin’s incredible run-up to cross $100,000 amid Trump’s support for crypto, and this week, we’ll be taking a look at another investment that has benefited massively from the Trump presidency: Tesla ($TSLA)

👀 The last time we took a look at Tesla was October 27, right before the election, when a surprise 20% profit beat sent the stock soaring 23%, recovering from a disappointing Robotaxi event where investors were left with more questions than answers.

📈 But since then, the stock has soared a wild 73%, hitting new all-time highs not seen since November 2021… without any new earnings reported.

🤔 The obvious driver? Trump.

🎰 Elon made a big bet backing Trump in the recent election, and his new-found political influence is making investors and analysts alike very bullish on Tesla’s prospects.

🤿 But how specifically will this new influence help Tesla? And is it enough to justify the massive $600B increase in Tesla’s market cap? Let’s dive in…

🚘 Paving the Way to Full Self-Driving

🧑‍⚖️ Elon has said many times before that “anyone who doesn’t believe Tesla will solve vehicle autonomy should not hold Tesla stock,” and one of the biggest barriers to achieving this goal has been regulation.

🐢 Tesla has been lagging behind competitors significantly in self-driving, with Google-owned Waymo receiving its “driverless deployment permit” in August last year and already operating in Phoenix, San Fransisco, LA, and Austin with plans to expand to Atlanta and Miami next year.

💥 But Trump’s recent election win is already paying dividends for Tesla’s self-driving efforts - with Trump’s transition team reccomending to scrap a crash reporting rule that Elon says “unfairly targeted his company”.

🚨 The rule requires automakers to report crashes if advanced driver-assistance or autonomous-driving technologies were engaged within 30 seconds of impact.

🙅‍♂️ Elon has opposed this rule for a few reasons:

• Misleading Data: Elon says that the presentation of crash data misleads consumers about vehicle safety.

• Reporting Burden: Tesla has far more cars with autopilot (over 2 million compared to 700 from Waymo), meaning far more data has to be reported. The much larger number of cars also results in a much higher number of crashes reported, leading to the perception that Tesla’s are less safe.

• Push for a Federal Process: Elon has said that the state-by-state framework is incredibly painful to navigate and that a unified federal approach would facilitate the development of autonomous technologies.

🏆 If Trump repeals this rule, it would be a huge sign that Elon’s political influence is paying off and reaping real benefits for Tesla in the race to autonomy.

💸 Repealing EV Tax Credits

Another perhaps surprising area that could benefit Tesla is Trump’s plans to repeal EV tax credits.

While Tesla has benefited massively from the tax credits (earning $739M in automotive regulatory credits last quarter), it is also the only automaker that is profitable - meaning the other big automakers may be more reliant on the credits than Tesla is.

In particular, it could spell bad news for Rivian which is in a desperate race to profitability - a story we deep-dived into a few weeks back (read that story here).

🤔 What About the Fundamentals?

So what does all this mean for the stock? Well, while Elon’s new political influence is certainly good news for Tesla - let’s take a look at the fundamentals. According to Bloomberg:

Based on data from stockanalysis.com, Tesla is trading at a forward price-earnings (a measure of how expensive a stock is) of over 4x the average Mag-7 company - including even Nvidia.

Even so, a number of analysts are still bullish - raising price targets on Elon’s new political influence:

It’s worth noting that even with the increased price targets, both analyst's targets are still below Tesla’s current price of $436, and according to TipRanks, the average price target across 34 analysts is $267.79 - a 38% downside from the current stock price.

As for me, the valuation has gotten too rich and too speculative, and I plan to sell my 2% position in Tesla and realize my 103% gain (make sure you follow me on Blossom to get notified of the trade and share your thoughts on my post!).

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OTHER BIG HEADLINES
🚀 Broadcom Up 26% After Crushing Earnings, Passing a $1T Market Cap

• Broadcom ($AVRO) is a designer, developer, and manufacturer of semiconductors. I deep-dived into its meteoric rise in October (read the full breakdown here).

• On Thursday, Broadcom’s Q4 earnings smashed Wall Street estimates, reporting a 30% increase in net income.

• The company credited the booming AI sector for its stellar performance, as its chips remain a critical component in powering AI servers.

• The stock surged 26% on Friday, marking its best single-day performance in years and surpassing a $1 Trillion market cap for the first time, with analysts raising price targets and rating the stock a Strong Buy

• Broadcom also raised its forward guidance, expecting continued growth in 2024, with AI and 5G rollouts serving as key catalysts.

🛒 Costco Beats Earnings by 7%, Now Up 52% This Year

• Costco’s ($COST) revenue jumped as membership renewals hit an all-time high

• The retail giant exceeded analyst expectations by 7%, reporting $1.6 billion in net profit for the quarter.

• Shares have soared 52% year-to-date, outperforming most of its retail peers amid a tough consumer environment.

• With the holiday season approaching, Costco expects to maintain its growth trajectory as consumers prioritize bulk and value shopping.

🏦 Bank of Canada Lowers Interest Rates 0.5% to 3.25%

• The BoC surprised markets with a 0.5% rate cut, signaling a shift in focus toward boosting economic growth amid cooling inflation.

• The decision reflects concerns about slowing consumer spending, weak housing data, and global economic headwinds.

• Equities rallied on the news, with the TSX up 1.8%, while the Canadian dollar weakened slightly against the US dollar.

• The rate cut provides relief to borrowers, especially homeowners, as mortgage rates edge lower, potentially reigniting demand in the housing market.

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FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

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