Home > Tesla Keeps Soaring – What Drives the Price Higher?

Tesla Keeps Soaring – What Drives the Price Higher?

Tesla had another great week, as the company’s share price increased by 8% in two consecutive days. Everyone wants to be part of the electric car company, even at the risk of paying a hefty premium. 

Stimulus checks helped to propel the stock market, and Tesla was one of the companies that benefited the most. Viewed by many as more than just an electric car company, Tesla shares closed the previous week at $867 and are up in pre-market today.

Tesla and Bitcoin – The Bubbles of the 21st Century?

Just like Bitcoin, which reached $40k over the weekend before crashing 20% in thin trading, Tesla is viewed by many traders as a bubble. However, huge differences between the two exist.

One is that Tesla is a publicly listed company on a stock exchange. Bitcoin, on the other hand, is unregulated. Because of that, it is easier to manipulate the price, especially because most Bitcoins are owned by a few wallets. This explains why the sharpest rallies in Bitcoin and other cryptocurrencies take place over the weekend or during holidays.

Just like Bitcoin investors, Tesla investors believe that the company will revolutionize the industry. Bitcoin believers argue that there is a need for a reform of the current financial system, and Bitcoin is here for that. Tesla believers argue that Elon Musk’s vision will lead the company to profitability way beyond the electric car industry.

The stimulus checks provided by the U.S. Congress to millions of Americans did help households survive the pandemic. However, for some, especially for the younger generation, the stimulus represents nothing but extra capital to be saved or invested. Where to invest it? Tesla is one answer. Fractional investing made it possible for traders to own only a piece of a company’s share.

Securities trading was one of the most common uses of the stimulus checks provided by the CARES act in the United States. $2.3 trillion was provided to every American with an income below $75,000 on a yearly basis, regardless of the employment situation.

Based on that, it is fair to assume that a big chunk of the recent stimulus will end up in the stock market as well. Moreover, one of the first things that the Democrats promised to do was to provide even more stimulus.

Therefore, one should not be surprised if Tesla will keep making new highs. As long as easy money keeps coming, the asset prices will continue to inflate.

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