Complex Made Simple

This is how Musk’s Tesla reached $1 trillion valuation  

Tesla's market value topped $1 trillion recently becoming the fifth firm in the US to do so after Microsoft, Alphabet, Apple, and Amazon

 Tesla's Model 3 climbed to the top of the charts in Europe in September Tesla recently reported a net income of $1.62 bn in Q3 of 2021 Tesla’s valuation touched its valuation level before its revenue could reach the $50-billion mark

Tesla’s market value topped $1 trillion recently becoming the fifth firm in the US to do so after Microsoft, Alphabet, Apple, and Amazon.

Tesla shares are worth over $1000. 

This was helped by the announcement by Hertz of a record order of 100,000 Teslas for its fleet in a deal worth $4.2 billion, and by influential Morgan Stanley auto analyst Adam Jonas who recently raised his price target for Tesla to $1,200 a share (from $900 previously).

The Hertz deal will make 20% of its global rental fleet all-electric.

Another report from JATO Dynamics said that Tesla’s Model 3 had climbed to the top of the charts in Europe in September, outselling any other conventional internal combustion engine.

Musk’s Tesla also recently reported a net income of $1.62 bn in Q3 of 2021, compared to $331 million in Q3 of 2020. The overwhelming majority of its sales came from the automaker’s less pricey Model 3 and Model Y vehicles, generating $13.76 bn in Q3, which is 56% higher than its $8.77 bn reported during the same quarter in 2020.

Revenue was also 15% higher than $11.96 bn reported in Q2 of 2021. Tesla stock has had a history of volatility, sometimes enflamed by CEO Elon Musk and his tweets. A year ago, Tesla shares were a bit over $420 a share.

With Tesla’s stock at an all-time high, Musk’s 23% stake in the company is now worth about $230 bn.

However, unlike its trillion-dollar peers, Tesla’s valuation touched that level before its revenue could reach the $50-billion mark.

Even though Tesla is the fifth-biggest company on the S&P 500 Index when ranked by market capitalization, it is in 89th place when ranked by last year’s annual revenue.

The EV maker’s shares are currently trading at 21 times its sales, with the same ratio hovering at 8 times for Facebook.  

Musk does not receive a salary. Instead, his pay package at Tesla provides 12 option tranches that allow him to purchase Tesla shares for $70 each, or over 90% discounted from current prices.