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Tesla's ( TSLA ) post-election surge has had investors wondering if the volatile stock might be in a bubble.

The market has been on a rally since Trump's win, particularly in sectors that are seen as beneficiaries of his policies. Though the president-elect has not been a fan of green energy and may withdraw the $7,500 EV credit created under the Biden administration, Tesla may be in a favorable position due to its CEO's connection with Trump.

Trump and Musk have publicly praised each other, with the latter donating at least $132 million to Trump and other Republicans' campaigns. Trump has hinted at a role for Musk in his administration — as the head of a newly created Department of Government Efficiency — and Musk has expressed interest in taking the job.

Two catalysts for Tesla are the world's continued transition to renewable energy and EVs and Musk’s relationship with Trump, per Malik. “For the long term, it has a lot of growth trajectory in front of it,” she said.

Shares of Tesla have been on a roller-coaster ride in 2024, as concerns about slowing growth hammered the stock in Q1. But the stock is up 16% since Nov. 6 and 33% year to date. It still lags behind Magnificent Seven peers like Nvidia, up over 200% this year, and Amazon, up 39%.

This points to Tesla's rise being “part of a catch-up trade for [the] stock,” said Malik. "With these stocks reacting so strongly in the past week or so, what we're seeing today is them starting to settle down."

Deutsche Bank’s Edison Yu and team wrote in a recent note that they expected a Trump victory to be a positive for Tesla.

"However, the magnitude of the move over the past week has surprised us (and many investors). Beyond attributing the price action to tactical factors (e.g., retail exuberance, algos, short covering due to lack of near-term negative catalysts, etc.), we see potential large terminal value benefits to Tesla’s efforts in auto, robotaxi, and even humanoid robotics.”

As Inauguration Day approaches, curiosity abounds about what it could mean for markets. For Tesla, investors will likely see “a settling period, a period of churn until Trump comes in and we really see the policies and the impact of what he puts into place,” Malik said.