From Trump Trade to Musk Trade: How Investor Sentiment Shifted Post-Election

The presidential election victory of Donald Trump in November ignited a notable rally in assets such as stocks and cryptocurrencies, commonly referred to as the “Trump trade.” However, as time unfolded, the anticipated benefits from this trade did not fully materialize. The expected decisive actions from Trump, specifically regarding tariffs and economic policies, were less clear-cut, which contributed to the fading of the Trump trade. In stark contrast, assets linked to Elon Musk, Trump’s efficiency-bureau right-hand man, have skyrocketed in value and appeal. This article delves into the factors that have shifted investor focus from the Trump trade to what can be termed the “Musk trade.”

The Incredible Surge of Elon Musk’s Net Worth

Bloomberg recently estimated that Elon Musk’s net worth has increased by approximately $135 billion since the election. This remarkable figure is indicative not only of Musk’s personal wealth but also of the soaring value of his various companies, both public and private. Investors are now increasingly looking at Musk’s ventures as sound financial prospects, particularly in the wake of Trump’s inconsistent political maneuverings.

Key Components of the Musk Trade

The positive outcomes of the Musk trade can be observed in several of his flagship ventures and financial assets. Here are five major ways in which the Musk trade has panned out since November:

Tesla

Despite experiencing volatility in returns this year, Tesla’s stock closed Thursday up 42% since the election. Musk has set forth an ambitious 2025 plan for the electric vehicle manufacturer, which includes the deployment of automated Cybercabs in Austin and a renewed focus on vehicle sales growth. Intriguingly, Trump’s initiative to revoke Biden-era tax credits for electric vehicles has been perceived by many Wall Street analysts as a potential headwind for competitors, indirectly benefiting Tesla.

Dogecoin

Often viewed as a meme currency, Dogecoin has seen a remarkable surge of about 60% since Trump’s electoral win. Musk has publicly expressed his fondness for this Shiba Inu-inspired cryptocurrency, even humorously naming a hypothetical White House office after it. The broader momentum surrounding meme coins, buoyed by the intertwining of Trump and Musk’s political affiliations, has remarkably worked in Dogecoin’s favor.

X (formerly Twitter)

Since Elon Musk acquired X, the platform has seen a resurgence in its financial health. The banks that financed Musk’s acquisition have managed to offload much of the previously less attractive debt linked to this acquisition. In a recent move, $4.74 billion of debt was sold at face value, which was an increase from the initially projected $3 billion due to unexpected high demand. Moreover, X’s financials have shown earnings before interest, taxes, depreciation, and amortization of $1.2 billion in 2024, holding stable from before Musk’s tenure.

xAI

Another Musk-driven venture, xAI, is witnessing a surge in investor interest. As a direct competitor to OpenAI, xAI has been rapidly expanding its AI capabilities, with plans to raise $10 billion at a valuation of $75 billion. This represents an astounding 88% increase from its previous valuation of $40 billion from a December funding round. Ross Gerber, CEO of Gerber Kawasaki and a long-time Tesla investor, acknowledged Musk’s skill set, stating, “This pivot into AI is obviously what he’s good at. He’s 100% focused on AI.”

SpaceX

Finally, SpaceX has also experienced a significant rise in valuation since Trump’s election, recently selling shares at a $350 billion valuation—up 67% from a previous $210 billion. The company is securing various contracts for its satellite internet division, Starlink, including significant deals not just within the US, but also with international governments like Italy, which is considering a $1.6 billion agreement for internet services.

Conclusion

As the financial markets continue to react to the political landscape, it is becoming increasingly clear that the dynamics of investor sentiment have shifted from the Trump trade to the Musk trade. Musk’s ventures in electric vehicles, cryptocurrencies, social media, artificial intelligence, and space exploration not only reflect emerging trends but also demonstrate the resilience and adaptability of his business strategies amidst turbulent political climates. While the Trump trade may have initially captured attention, the Musk trade arguably provides more exciting investment opportunities as we move forward.