The Two Elons
Political risk for Elon Musk ticks up a bit.
Elon Diverges From Trumpism
In case you missed it (and you may have, if you don’t follow this sort of thing closely), there was a big debate over Christmas last week on X about immigration. Jonathan Keeperman (better known by his pseudonym Lomez) has a good post about it on his Substack.
I wrote a post about it as well on ZeroHedge on Friday (“Elon’s Two Positions On Immigration”). The gist of it is Elon Musk and other Tech supporters of Trump starting calling for more immigration, ostensibly to get the highly skilled workers America’s cutting edge companies need. Then Trump supporters drilled down on the data and pushed back, pointing out that most H-1B visas have gone to not-very-highly-skilled workers—everything from dog walkers to Excel jockeys.
This led to some emotional responses from Elon Musk, where he toggled from a fairly popular position (America should import the top 0.01%) to an extremely unpopular position among Trump supporters (America should welcome pretty much everyone).
Why This Matters For Investors
Shares of Tesla (TSLA 0.00%↑) exploded higher after the election because the political risk facing it and Elon’s other companies seemed to have disappeared. Elon was best now friends with Trump (appearing so often at Mar-a-Lago that Trump’s granddaughter Kai started calling him “Uncle Elon”). That meant the DOJ investigations and lawsuits against Elon’s company’s would go away, as would regulatory hurdles.
That’s probably all still true, but the certainty of it ticked down a bit last week, with Elon’s outbursts. Immigration is the most important issue for Trump’s base, and while most Trump supporters would be okay with welcoming the top 0.01%, they are not okay with big increases in legal immigration, which will increase competition for jobs, and put downward pressure on wages, while raising rents and other costs.
Limiting Your Downside Risk
We still have some open Tesla options positions, after closing two for nice gains recently,
Call spread on Tesla (TSLA 9.19%↑). Entered at a net debit of $1.63 on 4/8/2024; exited at net credit of $4.74 on 11/8/2024. Profit: 191%.
Call spread on Tesla (TSLA 0.51%↑). Entered at a net debit of $1 on 11/12/2024; exited at a net credit of $4.78 on 12/17/2024. Profit: 378%.
But if you are long the underlying Tesla shares, and you want to scan for the optimal hedge to protect your position, you can download our iPhone hedging app by aiming your iPhone camera at the QR code below (or by tapping here, if you're reading this on your phone).
