During his speech at the presidential parade following Donald Trump's inauguration, Elon Musk made a suspiciously familiar gesture, which the telecast quickly cut off. But, as always, the Internet never forgets, and the video quickly spread through social media.
In the past (under the previous administration), such an incident would probably have sparked a major scandal. However, that does not seem to be the case this time. Perhaps Trump's decision to restore free speech and lift censorship, or Musk's new role within the government, could be playing a role.
As for the markets, judging by pre-market movements (
Tesla stock up $2.30), investors don’t seem to be expecting any surprises. Not even
canceling "green" initiatives, like tax incentives for electric vehicles, which could affect demand for Tesla’s products, has shaken their confidence.
Nevertheless, it is something worth worrying about. For example, Tesla's sales in Germany fell 41% year-on-year after the incentives were cut and it is unclear why the outcome should be any different this time. Expectations that Cybercab and the humanoid robot Optimus will offset the negative effect also remain low.
The market optimism could be related to expectations that Musk could act as a bridge between China and the Trump administration regarding economic and trade relations,
ultimately benefiting Tesla in China. Musk has stated that Tesla is willing to increase investments and expand its collaboration with China.
The problem is that the friendship between Musk, who now
heads the Department of Government Efficiency and the new president may not last long. If that happens, instead of listening to Musk's advice, the dynamic could shift in the opposite direction. But, of course, that's nothing more than speculation.
Not surprisingly, analysts are watching Tesla shares cautiously, with some even expecting a major correction. For example, Wells Fargo believes Tesla's autonomous cabs won't be enough to offset the company's weak fundamentals this year, but it has maintained its Underweight rating.
The bank predicts Tesla shares could drop nearly 70% to $125 over the next year as the company struggles to increase deliveries despite price cuts (it has already started offering discounts on new Cybertruck models) and faces intense competition from Chinese electric vehicle manufacturers.
Last but not least, it's important to remember that the company’s stock is already far from cheap, with a P/E ratio of around 113, which shows how much investors are willing to pay for the company’s earnings. In comparison, Volkswagen’s P/E ratio is just 3.96, and for Toyota around 9,06.
This article was written by FL Contributors at
www.forexlive.com.
