Tesla Share Price Prediction: Market Cap Crosses $1 Trillion. Hype or Value?

Summary:
• Tesla share price rose past the $340 mark in pre-market trading on Monday, but a 31 percent gain in a week calls for harder questions.

Tesla share price rose sharply in Monday’s pre-market session, reaching $343, the highest level since April 2022. At the time of writing, the stock was up by 7 percent above its Friday closing price, signifying the potential for another upbeat week. Tesla has gained 31 percent in the last five trading sessions, adding over $200 billion in value and its market capitalisation rising to $1.1 trillion.

Tesla’s stock price upsurge is attributable to Donald Trump’s US election win last week and the central role played by the company’s CEO, Elon Musk, in his campaign. Strictly speaking, that isn’t reflective of the company’s proven performance, but perceived potential good tidings during Trump’s tenure at the white house. That said, Tesla’s most recent quarterly earnings exceeded expectations, and Musk gave an upbeat guidance for the coming year.

Musk’s role in the incoming administration has not been defined, but Trump has shown a willingness to have him on board. However, it is unlikely that Musk would take a government job that would require him to relinquish some of his corporate positions. What is apparent is that the new administration will likely expedite the regulatory bottlenecks around autonomous driving.

However, faster approvals will not only benefit Tesla’s cyber cab and cyber van, but also rivals like Alphabet’s Waymo and Ford’s Cruise. Notably, Waymo and Cruise have been reporting losses since their launch, much as they aren’t currently produced at commercial scale.

Also, Alphabet’s and Ford’s stocks have risen by 5 and 7.2 percent in the last five sessions, both of which are less than a quarter of what Tesla (NASDAQ: TSLA) has gained during the same period. This raises the prospect that Tesla share price upsurge is largely driven by hype, as opposed to its intrinsic value. If that’s the case, a correction could be in the offing.

Tesla share price prediction

Tesla share price pivots at $341, and the upside will likely continue if the buyers keep the price above that level. That will likely see the first resistance come at $346. However, if the momentum extends, the price could move higher to test 4350.

Conversely, moving below $341 will favour the sellers to be in control. That will likely establish the first support at $338. However, a stronger downward momentum could break below that mark, invalidating the upside narrative. Also, that could see the price go lower and potentially test $334.