OPINION
Shares in Elon Musk’s electric car company were up 15% this morning NZT in late Nasdaq trading. (Update: Tesla’s stock rose 31.5% for the week to close above a US$1 trillion market cap for the first time in two years).
Trump has said he may abolish EV subsidies, and roll back or eliminate many vehicle emissions standards. So why are investors so bullish? Some might perceive benefits from Musk now having the incoming President’s ear, with a formal role in the new administration rumoured.
More directly, Trump I championed tariffs against Tesla’s largest global competitor, BYD (which United States President Joe Biden expanded), and Tesla investors can safely assume more protectionism is on the way. One potential fly in the ointment: Trump and Musk are both alpha dogs, not accustomed to sharing credit.
The Chinese firm’s keenly priced EVs might be the most popular in the world, but they are not even available in the US thanks to tariffs of up to 100%. Trump II will only increase that penalty.
During his first term, Trump signed an Executive Order saying China-owned TikTok had to be sold to a US firm or quit the country, citing security concerns - but the social media platform was able to delay it with legal challenges until he was out of office.
It was rinse-and-repeat with the Biden administration, complete with a rare show of bipartisanship as both Republicans and Democrats backed a second divest or quit order following a confidential briefing that highlighted security concerns.
Again, TikTok tied things up in court. It should now be safe. While out of office, Trump pulled a 360 on TikTok. He’s now an enthusiastic backer of the platform used so successfully by his campaign.
There’s also been a shift in the background commercial landscape.
Billionaire Wall Street financier and Republican “megadonor” Jeff Yass is an investor in both ByteDance and the recently listed Trump Media and Technology, owner of the ex-president’s Truth Social platform. The New York Times reported Yass had recruited several ex-Trump staffers to lobby against a TikTok ban. Trump said his position had not been influenced by Yass.
Beyond Meta (see below), Trump’s pivot to a more hands-off stance is good news for Big Tech in general.
Nascent efforts at state-level to make Google and others pay for news seem unlikely to be supported by the returning President, who has made his opinion of most media companies plain.
Against this, Trump’s running mate JD Vance has Federal Trade Commission chair Lina Khan to thank for her efforts to crack down on the tech giants. But Reuters reports Trump is poised to stop the Federal push to break up Google, and the New York Times says Khan - a Biden appointee - is not expected to continue her role under Trump.
The 2022 Inflation Reduction Act (IRA), which provided US$369 billion ($621b) to spur green infrastructure and decarbonisation, was a Biden centrepiece.
Trump has promised to gut the legislation, which he called “the green scam”, and withhold US$104b in IRA funds yet to be allocated.
He has been nakedly hostile to all forms of support for clean energy and frequently promoted conspiracy theories about wind and solar on the campaign trail.
When it reported its full-year result in March, NZX-listed Infratil highlighted Boston-based solar farm operator Long Road Energy as one of its four key assets. The others were CDC, One NZ and Wellington Airport.
Infratil said “CDC and Long Road Energy are key drivers of growth and value creation, developing new data centres and solar farms at attractive returns”.
Infratil noted in its March 2024 investor presentation: “The Inflation Reduction Act faces potential uncertainties with the 2024 US election, especially if the Republicans gain control of the presidency, House and Senate”. Republicans have won the White House and Senate, but control of the House still hangs in the balance as final counting continues.
“While Republicans did not support the [act] passing, it’s extremely rare for retrospective changes or repeals of tax credits,” Infratil said. Some argument is bolstered by some US commentators saying Republican-voting states have enjoyed economic renewal from projects backed by the act.
Infratil’s annual report said the act’s provisions, including a 10% domestic tax credit, would be at risk with a new administration, but added that more than 80% of the investment in large-scale clean energy and semiconductor manufacturing pledged since the passage of the act and the Chips and Science Act will go to Republican congressional districts.
“Even if Republicans controlled the federal government, many in the party may view reversing the [Inflation Reduction Act] as too politically risky.”
Infratil holds a 37.7% stake in Long Road, which it valued at $1.95b in its 2024 annual report (up from $1.53b in 2023), making it the firm’s third largest asset after its 48% stake in CDC ($5.2b) and its 100% share of One NZ ($3.53b). Long Road had operating earnings of US$56 million, up US$24m (78%) from the prior year, in FY2024 and earlier this year forecast a 17% gain for FY2025.
According to its 2024 annual report, 7% of Infratil’s operating earnings come from renewables and 15% of its asset portfolio is based in the US.
While Trump’s efforts to describe cryptocurrency could be politely described as “interesting”, his full-throated support for the scandal-plagued sector saw it heavily back his campaign. Today, bitcoin was up 8% to an all-time high of US$75,943.
Virtual currency made big strides towards the mainstream under the Biden Administration, which approved cryptocurrency-based exchange-traded funds. But the industry saw itself as being hounded by regulators. Its backers are betting on a lighter touch under Trump II.
It’s a negative development for Rocket Lab that the chief executive of its principal rival, SpaceX, is now sitting on the shoulder of the man in charge of the US Federal Government , easily the Kiwi-American firm’s single largest customer.
Rumblings that SpaceX - and its satellite broadband subsidiary Starlink - are too dominant, may now melt away.
The New York Times reported, “Even before Donald Trump was reelected, his best-known backer, Elon Musk, had come to him with a request for his presidential transition. He wanted Trump to hire some employees from Musk’s rocket company, SpaceX, as top government officials - including at the Defense Department, according to two people briefed on the calls. That request, which would seed SpaceX employees into an agency that is one of its biggest customers, is a sign of the benefits that Musk may reap after investing more than US$100 million in Trump’s campaign.”
It continued, “The biggest ties to the federal government among Musk’s operations are with SpaceX, which just last year secured US$3 billion in new federal government commitments and a total of about US$11 billion in contracts over the five years. But Musk is seeking more. His allies in Congress and at the Federal Communications Commission have already challenged a decision by the commission to revoke a plan to offer SpaceX a US$856 million subsidy to provide broadband internet service in rural parts of the United States.”
On the plus side, the Kiwi-American firm now has US$1b in forward bookings - representing years of business.
And Rocket Lab has been for a long time US-registered and US headquartered, and its new, much larger Neutron rocket going toe-to-toe with SpaceX’s Falcon 9 will launch exclusively from Virginia, which should shield it from Trump’s protectionism.
Founder and chief executive Peter Beck will back himself and his company to keep innovating, and the likes of Nasa and the US Department of Defence and Space Force will want a strong number two to SpaceX for redundancy and cost-competition.
Certainly, investors were backing that theory this morning, with Rocket Lab shares up 10.5% to US$13.05 today hit a new three-year high and outpace broader market gains (the Nasdaq was up 2.95%).
Sir Peter would have welcomed the gains - but the gloss was taken off his day as his account on Musk’s X platform was compromised by someone who posted a link to a crypto scam.
Shares in Palantir, the data analysis firm founded by Kiwi (and US and German) citizen Peter Thiel rose 6.34% today and are up 39.73% for the month, in part because of strong quarterly numbers as its new AI tool drove sales.
The Washington Post said Palantir “flourished” under the first Trump Administration as it won government contracts tied to immigration crackdowns.
Thiel has had an on-again, off-again relationship with Trump since, but has been a strong supporter of incoming Vice-President JD Vance - although backroom deal conspiracy theorists should also note that Palantir chief executive Alex Karp backed Vice-President Kamala Harris and earlier donated to Biden.
Regardless, investors seem to be betting Palantir will enjoy a potential boost for a renewed immigration crackdown.
The Facebook owner’s shares were down 1% today as other tech stocks boomed.
In March, Trump called Facebook - which banned him from its platform after the Capital Hill riot in January 2021 - “an enemy of the people”.
Founder Mark Zuckerberg kept his head down during the 2024 campaign, which could help mitigate any fallout.
The owner of Trump’s Truth Social social media platform had its shares rise 7.01% this morning for a market cap of US$7.2b, valuing Trump’s stake at around US$3.6b.
That valuation comes with some robust multiples.
Although it was rather overshadowed by events, Trump Media released its quarterly financials on election day.
Revenue fell almost 6% to US$1m in the three months to September 30, while net losses narrowed to US$19.2m from US$26m in the same period of last year.
While the final shape of his tariff policy will depend on the Senate and House of Representatives, Trump has mooted 60% tariffs on goods from China and a blanket 10% on all goods and services from other countries.
If enacted, that will be bad news for all Kiwi exporters including those in the tech industry and especially SaaS (”software-as-a-service” or cloud software makers).
The 2023 TIN (Technology Investment Network) report said the local tech industry had offshore revenue of $13b last year, with the US its second largest ($4.2b) and fastest (19%) growing market.
Another factor: SaaS companies have leaned strongly on venture capital, which suffered a drought when interest rates were hiked worldwide to fight inflation post-Covid, making other investments more attractive.
Some economists see Trump’s tariff policies as inflationary, which could put the sector under renewed pressure.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
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