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Tesla's Stock Surge and Its Ties to Trump's Team

2024-11-18

In This Story, Tesla (TSLA + 6.83%) stock witnessed a remarkable uptick early on Monday. It is reported that President-elect Donald Trump's team is set to grant a significant victory to key ally Elon Musk. This development has sparked considerable interest among investors and industry observers.

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Bloomberg News reveals that members of Trump's transition team have expressed their intention to make a federal framework for fully autonomous vehicles a top priority for the incoming Department of Transportation. Currently, federal rules pose challenges for deploying vehicles like Tesla's advertised Cybercab, which lack steering wheels and pedals.This could prove to be a major advantage for Musk. He has consistently emphasized Trump's election win as a victory for the US and his own companies. In October, during an earnings call, he stated that national approval is crucial. He even proposed the creation of a Department of Government Efficiency (DOGE) to push for a national approach to regulating driverless vehicles.Although the federal government has previously explored national regulations for autonomous vehicles, guidance and standards issued by federal regulators have been limited. Currently, 19 states have laws allowing driverless vehicles to operate on public roads. Musk expects Tesla to obtain approval to launch rideshare services in California, Texas, and "some other states" in 2025, along with approval for a "fully autonomous" version of the company's driver-assist software. He believes that Tesla will likely succeed in California, where rivals like Google's Waymo and Amazon's Zoox have operations.Bloomberg reports that bipartisan legislation is being considered to establish federal rules for autonomous vehicles. Without legislation, the Transportation Department would need to issue rules through the National Highway Traffic Safety Administration to facilitate deployment. The agency currently permits companies to deploy up to 2,500 self-driving vehicles annually.Tesla stock surged nearly 6% in pre-market trading on Monday. Year-to-date, the shares have gained 29%, largely driven by a stock rally following Trump's election victory.Musk wields significant influence over the president-elect, although the extent of his influence remains unclear. Since Trump's victory, Musk has attended many meetings and meals, including those with foreign leaders and ambassadors. He has also requested that SpaceX employees be appointed as top government officials, including at the Department of Defense.Last week, Trump appointed Musk and former presidential candidate Vivek Ramaswamy to lead DOGE, an outside-of-government group aiming to cut approximately $2 trillion from the budget, which is about one-third of all federal spending.Musk is expected to play a crucial role in guiding the Trump administration's artificial intelligence initiatives, which will benefit X (META + 0.63%), Tesla, and xAI. He will also participate in discussions regarding tariffs on Chinese products. Trump's team plans to eliminate the $7,500 tax credit for electric vehicle purchases, which has benefited both Tesla and its rivals. However, Musk believes that Tesla will be less affected compared to other companies.Musk's SpaceX could also benefit from Trump's presidency. The CEO has expressed the need to change regulations to eliminate the need for companies to repeatedly obtain permits to launch rockets.Over the weekend, Trump appointed Musk's ally and Commissioner Brendan Carr to lead the Federal Communications Commission, which is likely to provide a boost to SpaceX's Starlink subsidiary.

Super Micro Computer has been in the spotlight recently as its shares showed significant movements. In early trading on Monday, the shares rose, continuing their rally on the expectation that the tech company is preparing to submit a plan to avoid being delisted from the Nasdaq. This comes after a series of events and challenges faced by the company.

Super Micro's Journey to Stay Listed Amidst Challenges

Gains After Initial Setbacks

Super Micro Computer's shares initially took a hit in recent months due to concerns about potential delisting. The company delayed filing its annual report in August, which led to a decline in its stock value. However, there is now hope as it is on track to submit a plan by Monday to meet the deadline set by the Nasdaq. This turnaround has sparked a rally in its shares, with them climbing more than 18% after the market opened on Monday. Despite this increase, they are still down more than 80% from their highs in March.

The company's efforts to address these issues are crucial for its future. By submitting a plan to avoid delisting, Super Micro Computer aims to regain the trust of investors and stakeholders. This shows its determination to overcome the challenges and continue operating in the market.

Impact of Accounting Allegations

The situation was further complicated by accusations of "accounting manipulation" from short seller Hindenburg Research. This led to the resignation of accounting firm EY and speculation about the company's accounting practices. However, Super Micro Computer has been working to address these concerns and has stated that it "remains unable at this time to predict" when it will file the delayed annual report.

The company's transparency in addressing these issues is important. It shows that they are taking the allegations seriously and are working towards resolving them. By providing updates and explanations, Super Micro Computer is trying to restore confidence in its operations.

Barron's Report and Deadline

According to Barron's, which cited a person familiar with the matter, the server manufacturer expects to be able to meet the deadline set by the Nasdaq. This indicates that the company is making progress in its efforts to avoid delisting. The report provides some clarity and reassurance to investors, who have been closely watching the situation.

The deadline is a significant milestone for Super Micro Computer. Meeting it will not only help the company avoid delisting but also demonstrate its ability to manage and resolve issues in a timely manner. It is a crucial step in its recovery process.

Super Micro Computer (SMCI) is making significant moves in the stock market. Reports suggest that on Monday, it will file a plan with the Nasdaq Stock Market to avoid delisting. This news has led to a surge in SMCI stock, although it is now off its intraday highs. The San Jose-based company had a deadline of Monday to present a plan to regain compliance with Nasdaq's listing requirements. It is currently delinquent in filing its financial reports for the fiscal year ended June 30 and the first quarter of fiscal 2025.

Stock Performance and Highlights

In late morning trades today, SMCI stock was up more than 14% to 21.33. Earlier in the session, it was up more than 22% to 22.70. The stock hit an all-time high of 122.90 on March 8 before facing troubles. Super Micro is in the process of hiring a new auditor as its previous accounting firm, Ernst & Young, quit on October 24 due to concerns about financial reporting.During this year, Super Micro Computer shares soared as hyperscale cloud computing firms started investing heavily in AI data center gear. Meanwhile, rivals like Dell Technologies (DELL) are trying to gain market share from a weakened Super Micro. On Monday, Dell stock received price target hikes from three Wall Street firms: Mizuho Securities, Morgan Stanley, and Wells Fargo, all with buy ratings. However, Barclays suspended coverage of SMCI stock on Friday due to Super Micro's operational issues.Follow Patrick Seitz on X (formerly Twitter) at @IBD_PSeitz for more stories on consumer technology, software, and semiconductor stocks.

Nasdaq Compliance and Financial Reports

Super Micro's need to file a plan with Nasdaq is crucial. Failing to do so would lead to delisting, which could have significant consequences for the company. The delinquent financial reports also raise concerns among investors. The company's efforts to address these issues and regain compliance are closely watched by the market.The process of hiring a new auditor shows Super Micro's commitment to improving its financial reporting and ensuring transparency. This move is likely to instill confidence in investors and help the company move forward.

Rivalry with Dell Technologies

The rivalry between Super Micro and Dell Technologies is intense. Dell is aiming to take market share from a weakened Super Micro, which has faced challenges in recent times. The price target hikes for Dell stock by three Wall Street firms indicate their confidence in Dell's prospects. However, Super Micro still has a significant presence in the market and is likely to continue to compete.The actions of both companies will have an impact on the overall market and the data center industry. Investors will be closely monitoring their performance and strategies.

Market Reactions and Future Outlook

The surge in SMCI stock after the news of the Nasdaq plan shows the market's reaction to the company's efforts. However, it is important to note that the stock is now off its highs, indicating that there are still uncertainties.Super Micro's future outlook depends on its ability to address the issues related to financial reporting and regain compliance. The hiring of a new auditor is a positive step, but there are still challenges ahead.The data center industry is evolving rapidly, and companies like Super Micro and Dell need to adapt to stay competitive. Investors will be looking for signs of growth and stability as they make decisions about their investments.