Hertz, a global chain of car rental brands, announced an order for 100,000 electric cars from Tesla to establish an electric car rental team by the end of 2022. By this Tesla’s stock price rose by more than 12%, and its market value exceeded US$1 trillion for the first time. Its CEO Elon Musk’s personal net worth also reached a record US$281 billion.
This allows Tesla to join the ranks of Apple, Amazon, Google’s parent company Alphabet, and Microsoft, all of which have a market value of more than $1 trillion. The news of the deal with Hertz made Tesla’s stock price rise above $1,045 per share in midday and hit a record high on the first trading day after the stock price exceeded $900. The stock closed up 12.66% to approximately $1024 per share.
Moreover, Strong EU sales records and bullish analyst comments further boosted Tesla’s stock price. Morgan Stanley analyst Adam Jonas raised Tesla’s price target from $900 to $1,200 per share on Sunday. British automotive research company Jato Dynamics said on Monday that the Tesla Model 3 became the best-selling new car in Europe in September, surpassing gasoline vehicles for the first time.
According to previous reports, the transaction with Hertz will bring Tesla $4.2 billion in revenue, which is the largest electric car ordering transaction in history. These cars are scheduled to be delivered in the next 14 months and will be available to customers in the United States and parts of Europe as early as November.
Furthermore, the deal was reached more than a year after Hertz filed for bankruptcy protection during the peak of the new crown pneumonia epidemic when people’s demand for travel and rental vehicles weakened sharply. This year, investors from Knighthead Capital Management and Certares Management stated that they will take over the company.
Besides, Tesla is the second-fastest company with a market capitalization of over the $1 trillion mark, and it is only more than 12 years since its initial public offering (IPO) in 2010. Previously, only Facebook achieved this goal earlier than it did, and it took just over 9 years for the social network giant to reach a market value of US$1 trillion from its IPO.
Apple took the longest time. It took 37 years from the time it was listed and traded in 1980 to the realization of a $1 trillion market value, followed by Microsoft, which took 33 years. It took Amazon 21 years, and Google reached this standard for the first time 15 years after it went public.
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On Monday, Tesla’s market value surpassed that of Facebook, whose share price was declining due to the recent disclosure of a large number of internal documents. Facebook’s stock price closed down more than 5% last Friday. Despite a slight rebound on Monday, it still fell 17% from its peak earlier this year, when the company’s market value exceeded $1 trillion. At the close of trading on Monday, Facebook’s market value was $927 billion.
In contrast, Tesla’s market value has exceeded the combined market value of the world’s 11 largest automakers. Tesla’s market value is now nearly four times that of Toyota, the second-largest automaker ($280 billion), even though the latter’s sales and profits far exceed Tesla.
Last year, Tesla sold only 500,000 cars worldwide, which means that the current market value of each car is approximately US$2 million. The company plans to sell close to 1 million vehicles throughout the year. This is still equivalent to a valuation of more than $1 million per car, but it is clear that investors are still betting that Tesla will achieve its goal of 50% or more annual sales growth in the next few years.
After the news of Hertz’s order of 100,000 electric cars prompted Tesla’s stock price to soar, Musk’s personal wealth increased by 28.5 billion US dollars to 281 billion US dollars. About two-thirds of Musk’s net assets are directly related to Tesla’s stocks and options, and he is the co-founder and CEO of this company.
In terms of wealth, the gap between Musk and other billionaires is getting bigger and bigger. According to the Bloomberg Billionaires Index, the second Amazon founder Jeff Bezos has a net worth of approximately $193 billion.
The spike in Tesla’s stock price is not the only source of Musk’s wealth. A document submitted to the regulator on Monday showed that the seventh part of Musk’s 2018 huge compensation plan was unlocked in the third quarter, increasing his net worth by approximately $8 billion.
