Tesla (NASDAQ: TSLA) has a new bull in Speaker of the House, Nancy Pelosi, who bought a substantial sum of the automaker’s stock, new government filings show.
Pelosi, originally from Baltimore, Maryland, and now a California-based Democrat, bought 25 call options on December 22nd, one day after joining the S&P 500. The calls have a strike price of March 18th, 2022, and the transaction’s value is between $500,001 and $1,000,000, the government filings show.
Tesla stock has surged from $70.10 to over $865 in the past year, accounting for a dramatic increase in price per share due to its growth and scalability. Pelosi’s bets could be based on the fruition that the newly-appointed President Joe Biden, who has a plan set for EV manufacturers to benefit greatly from sustainable vehicle manufacturing, has strong support for the electric transportation sector. Wedbush analyst Dan Ives said the now predominantly-Democratic senate could also positively affect the sustainable energy and transportation sectors.
“A Biden White House and Blue Senate is a very bullish political backdrop and a potential ‘game changer’ for Tesla and the overall (electric vehicle) sector in the US, with a more green-driven agenda now certainly in the cards over the next few years,” Ives wrote in a note to investors.
Biden’s plan looks to expand employment by adding “1 million new jobs in auto manufacturing, auto supply chains, and auto infrastructure,” including the electric-vehicle recharging infrastructure. There have also been talks of the reintroduction of the $7,500 EV tax credit that would give buyers a hefty break when they buy a sustainable vehicle. This could also leave out the disqualification of certain EV brands after it sells a set number of units. This will benefit Tesla greatly, as the company delivered nearly half a million cars in 2020 alone. The credit disappeared after 200,000 units were sold.
Pelosi is also a known investor of long-term options, according to DaveManuel.com, by way of TheStreet. “Pelosi and her husband love taking long-term options positions,” the site said. Based on the fact that Tesla closed at $640.34 on the day of Pelosi’s options purchase, “which means that the per contract cost was likely in the range of $300-$330 per contract, as Tesla’s options contain a very high amount of extrinsic value (time and volatility).”
Tesla is up around 16% so far in 2021, and the company plans to outline its Q4 2020 Earnings in a call on Wednesday, January 27th. At the time of writing, Tesla shares were trading at $868.74, up 2.6%.
Disclosure: Joey Klender is a TSLA Shareholder.