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Tesla Passes $1 Trillion Market Valuation As Hertz Deal Triggers Fresh Record High

Tesla joined an elite club of five U.S. companies with a trillion dollar market value after a $4.4 billion deal with Hertz pushed its shares to a fresh record high of just under $1,000.

Tesla  (TSLA) - Get Tesla Inc Report shares passed the $1 trillion dollar mark Monday, racing to a record high of just under $1,000 a share amid a $4.4 billion order from rental giant Hertz Global HTZ and a price target boost from Morgan Stanley.

Tesla, which took over ten years as a public company to reach the iconic valuation, joins an elite list of only five other American companies that have ascended that peak: Microsoft  (MSFT) - Get Microsoft Corporation (MSFT) Report, Apple  (AAPL) - Get Apple Inc. (AAPL) Report, Google parent Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report, Facebook  (FB) - Get Facebook, Inc. Class A Report and Amazon  (AMZN) - Get Amazon.com, Inc. Report.

Morgan Stanley analyst Adam Jonas raised his price target on Tesla prior to the start of trading by $300, to $1,200 per share, while reiterating an "overweight' rating, citing higher vehicle sales volumes in the coming years as the group demonstrates is "manufacturing leadership' in the EV sector.

The stock was also given a boost by news that Hertz had ordered 100,000 of Tesla's Model 3 sedans  -- which are expected to be delivered by the end of next year -- as it ramps-up the size of its electrified rental fleet.

"The Tesla you see today is the product of pre-COVID, sub $100 billion Tesla," Jonas wrote. "The Tesla you'll likely see over the next 12 to 18 months would demonstrate the capabilities of the trillion dollar Tesla, emphasizing step-changes in manufacturing, cost reduction ... expansion in capacity, model lineup and services offerings."

Tesla shares closed 12.66% higher on the Monday session at $1,024.86 each, a move that would peg the group's value at around $1.01 trillion - firmly just ahead of the $926 billion valuation for Facebook. The stock hit an all-time high of $1,045.05 earlier in the session. 

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Tesla posted net income of just over $2 billion for the three months ending in September, alongside the strongest profit margins in the group's history -- 30.5% -- and record sales of $13.7 billion. The blowout figures followed another all-time high in third quarter deliveries, which rose 73.2% from last year to 241,300 units.

Non-GAAP earnings were pegged at $1.86 per share, up 135% from the same period last year and well ahead of the Street consensus forecast of $1.59 per share.

Tesla noted in its earnings release that 'a variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed", adding that "we are pushing the boundaries on new product and manufacturing technologies at these factories, which makes it difficult to predict the exact pace of the ramp" of production in soon-to-be opened factories in Texas and Berlin.

Earlier this month, Tesla also unveiled plans to move its headquarters from California, its home for nearly two decades, to Texas, the site of its developing gigafactory and the home of SpaceX.

The decision, announced at the company's annual meeting in San Francisco, follows both Musk' personal move to the Lone Star State and a series of rows between the carmaking billionaire and the California authorities over issues including safety, taxes and COVID-19 precautions.

Musk also pledged to maintain the group's Freemont, California-based plant, adding he hoped to boost production there by 50% over the coming years.