Prediction: TSLA Will Split Its Stock Under a Trump Presidency

Tesla (NASDAQ:TSLA) has established a pattern of stock splits in recent years, with two significant instances occurring since its public debut in 2010. The first split, a five-for-one division, took place in 2020 when TSLA stocks were valued at $2,250 per share, subsequently adjusting the price to $450. Just two years later, the company’s stock executed a three-for-one split, reducing the value from $900 to $300 per share. Currently, with TSLA trading under $289, a stock split may not be on the immediate horizon. However, considering the shifting political landscape under a Trump presidency, it is reasonable to predict a third stock split before 2028.

Elon Musk’s alliance with President Donald Trump has already begun to yield positive results, as evidenced by a 15% surge in Tesla shares the day after the election results were announced. This momentum is likely to continue throughout Trump’s administration, fueling a potential rise in the company’s stock price that could again justify a stock split before the next presidential election cycle concludes.

Recent History of Stock Splits and Future Prospects

Within the last four years, Elon Musk’s Tesla has successfully split its stock twice, reflecting a strategic move to enhance market accessibility and attract a wider investor base. With Trump redefining the economic landscape, many of his policy proposals may create a favorable environment for Tesla, potentially enhancing its market dominance and profitability.

Contrary to some expectations, the elimination of the $7,500 tax credit proposed by Trump would not negatively impact Tesla, as several of its models, including the Model 3 and the Cybertruck, have already ceased eligibility for such credits. In fact, Musk has expressed support for the removal of industry-wide subsidies, believing that a level playing field would benefit Tesla by reducing competition. As the largest EV maker in the U.S. and the only one currently profitable, Tesla stands to gain significantly from the absence of financial support for its competitors, such as Ford (NYSE:F) and General Motors (NYSE:GM), who are currently struggling to find profitability in their EV production.

Addressing Foreign Competition

Among Trump’s proposals is the potential for tariffs on imports ranging from 10% to 20%, particularly targeting Chinese manufacturers with duties as steep as 60%. This would effectively drive up costs for competitors like BYD, Nio (NYSE:NIO), and Xpeng (NYSE:XPEV), keeping affordable foreign-made EVs out of the U.S. market. Consequently, Tesla would face reduced foreign competition, thereby solidifying its market stronghold.

The proposed tax reform lowering the corporate tax rate to 15% for companies manufacturing domestically could also bolster Tesla’s profit margins. As Tesla’s earnings increase, the stock price should naturally follow suit. If demand for EVs rebounds — something that seems plausible given an economic recovery — it is entirely reasonable to consider the possibility of Tesla’s shares rising significantly once again. In fact, should TSLA reach $900 per share again, it would signify a tripling of its current value — a highly feasible scenario, especially with the current momentum favorable to the company.

Conclusion: A Stock Split on the Horizon?

In summary, the implications of Trump’s presidency for Tesla are multi-faceted and seem bullish. With reduced competition, favorable tax implications, and a general recovery in demand for electric vehicles, a stock split at Tesla is not merely an optimistic prediction; it is a tangible possibility. As we navigate through the next four years, investors should keenly observe Tesla’s performance and the broader economic climate, as both will play critical roles in shaping the company’s future. Prepare yourself; a stock split may very well be around the corner!

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