Tesla TSLA has made a solid comeback in recent months and has been on a powerful rally, especially after Trump's election victory. After reclaiming the trillion-dollar market cap last month, shares of the electric vehicle maker spiked to a three-year high and are approaching their historic peak of $410. The gains came on the back of a bullish report from Morgan Stanley, which reiterated an Overweight rating and raised the price target on Tesla from $310 to $400.
Investors should bet on ETFs with the largest exposure to this luxury carmaker to tap the potential Tesla surge. These include Direxion Daily TSLA Bull 2X Shares TSLL, T-REX 2X Long Tesla Daily Target ETF TSLT, GraniteShares 2x Long TSLA Daily ETF TSLR, Tradr 1.5X Long TSLA Weekly ETF TSLW and GraniteShares 1.25x Long TSLA Daily ETF TSL (read: 4 Top-Performing ETFs of Last Week).
TSLL, TSLT and TSLR offer two times (200%) the daily percentage change of the common stock of Tesla. TSLW tracks 1.5X (150%) the weekly performance of Tesla while TSL offers 1.25 times (125%) the daily percentage change of the common stock of Tesla.
Bullish Analysts
Morgan Stanley named Tesla the top pick, buoyed by investor enthusiasm around the company’s role in AI, renewable energy and onshoring trends. Deutsche Bank also highlighted Tesla as one of its top picks for 2025, citing its leadership in autonomous driving technology and its ability to withstand industry headwinds. It increased the price target on Tesla to $370 from $295, keeping a Buy rating on the shares.
Bank of America raised the price target to $400 from $350 last week and maintained a Buy rating, citing solid growth opportunities in 2025 and beyond with Tesla’s core EV business and launch of its robotaxi offering, as well as a longer-term from its investments in Optimus.
Trump to Fuel Gains
With Trump vowing to roll back vehicle emissions standards and halt other government support for EVs, Tesla will likely benefit from President-elect Trump's administration for a number of reasons. Tesla has the scale and scope that is unmatched in the EV industry and this dynamic could give the EV maker a clear competitive advantage in a non-EV subsidy environment. Additionally, the potential for higher China tariffs (as promised by Trump) would likely keep cheaper Chinese EV manufacturers like BYD and Nio (NIO) from flooding the U.S. market in the coming years (read: Tesla Stock Pops 5% on AV Deregulation Buzz: ETFs in Focus).
Trump’s administration will also help expedite regulatory approval of the company's autonomous driving technology. Tesla CEO Elon Musk has proposed a national standard for self-driving vehicles that would make it easier for the company to roll out the robotaxis planned for next year. It expects vehicle sales to grow 20% to 30% next year and promised to launch an affordable vehicle, below $30,000 after subsidies, in the first half of 2025. Tesla is working toward increasing production and said its new Cybertruck is on track to make a profit by the end of the year.
Solid Fundamentals
Tesla, which joins the trillion-dollar club once again last month, currently has a Zacks Rank #1 (Strong Buy). It saw solid earnings estimate revisions of 7 cents for the next year over the past 30 days.
The EV maker currently has a Wall Street analyst recommendation of 2.91 on a scale of 1 to 5 (Strong Buy to Strong Sell) made by 40 brokerage firms. This is up from 2.96 a month ago based on 39 recommendations. Of the 40 recommendations, 11 are Strong Buy and two are Buy. Strong Buy and Buy, respectively, account for 27.5% and 5% of all recommendations. Based on short-term price targets offered by 35 analysts, the average price target for Tesla comes to $243.53.
High Valuation: A Cause of Concern?
TSLA stock is up more than 50% since the election and about 61% so far this year.
Tesla stock is expensive, trading at an exploding P/E ratio of 157.95 compared with that of the Automotive - Domestic industry’s 12.22 times. However, this valuation will be justified if Trump can really boost the company’s growth prospects.
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Tesla, Inc. (TSLA): Free Stock Analysis Report
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