FX168 Financial News (North America) reported that on Wednesday (December 11), Tesla's stock price soared to a historic high, surpassing the record set in 2021, thanks to a market rebound after the US elections and Wall Street's growing optimism about Elon Musk's electric vehicle company.

Tesla's stock price closed at $424.77, approximately $15 higher than the previous record high of $409.97 set on November 4, 2021.

(Image source: CNBC)

Market performance and Musk's participation in the election.

Tesla's market cap has surged approximately 71% this year, with almost all of the gains occurring last month after Donald Trump won the election. In November, Tesla's stock price increased by 38%, marking the best performing month since January 2023 and the 10th largest monthly gain in history.

According to documents from the Federal Election Commission, Musk invested $0.277 billion to support Trump's campaign and considers endorsing Republican candidates a full-time job. Before the election, he funded voter registration efforts in key swing states and used his social media platform X to heavily promote Trump, including misinformation.

According to Forbes, Musk's personal wealth has ballooned to over $372 billion, and he has been appointed as one of the heads of the 'Department of Government Efficiency' in the upcoming Trump administration, which will collaborate with former Republican presidential candidate Vivek Ramaswamy.

Musk's new role may grant him control over federal agencies' budgets and personnel arrangements, and push for the removal of inconvenient regulatory policies. During the Tesla Earnings Reports conference call in October, he stated that he plans to leverage his relationship with Trump to establish a "federal-level autonomous vehicle approval process" to replace the current state-by-state approval system.

Bullish sentiment among Wall Street Analysts.

"The stock price is responding to the 'Trump effect,'" said Craig Irwin, an Analyst at Roth MKM, during an interview last week. He just raised Tesla's Target Price from $85 to $380, and wrote in his report: "Musk's genuine support for Trump could double Tesla's potential user base and enhance market confidence in a demand inflection point."

On Wednesday, Analysts at Goldman Sachs also raised Tesla's Target Price, joining the ranks of Investment Banks that are Bullish on Tesla. These Analysts stated, "The market is more forward-looking on Tesla's prospects, especially regarding opportunities in AI." Analysts at Morgan Stanley and Bank of America have also recently released Bullish reports.

Double catalyst.

Since Trump's election victory, Musk has frequently accompanied the president-elect in meetings with world leaders and has provided advice to him and congressional members, concerning federal agencies, regulatory policies, and budget cuts or significant reductions.

Tesla's stock price's record highs mark a dramatic reversal in its performance this year. In the first quarter of this year, Tesla's stock price plummeted by 29%, making it the worst-performing quarter since the end of 2022, and the third-largest quarterly drop since Tesla went public in 2010. At that time, investors were concerned about Tesla's core Business, partly due to intensified competition from China leading to a decline in the company's first-quarter revenue.

Latest Earnings Reports and future outlook.

In the third quarter Earnings Reports in October, Tesla reported a revenue increase of 8% year-on-year, slightly below market expectations. However, the company's profits exceeded expectations, and Musk stated in the conference call that his "best guess" is that, benefiting from "lower-cost vehicles" and the arrival of "self-driving", next year's "vehicle growth" will reach 20%-30%. This forecast is higher than the expectations of Analysts.