Tesla shares jumped for a fourth straight session on Monday, bringing the market capitalization for the electric-vehicle maker above $1 trillion for the first-time ever.
The stock rose as much as 9.8 per cent to reach $998.74 per share in afternoon trading. Tesla’s year-to-date advance came in at nearly 41 per cent through intraday trading, with the stock outperforming against the S&P 500’s 21.6 per cent rise over that same period.
With a $1 trillion market capitalization, Tesla joins an exclusive club of mega-cap technology companies with a market value of at least that level. As of Monday, the only U.S.-based companies with a market capitalization of at least $1 trillion were Amazon, Apple, Microsoft and Google’s parent-company Alphabet. Facebook was last a member of the $1 trillion club in late September.
A bevy of positive news helped push the stock to a fresh all-time high. Earlier on Monday, car-rental company Hertz announced the company had ordered 100,000 Tesla vehicles, with these set for delivery by the end of 2022. Hertz said it was setting out to “offer the largest EV rental fleet in North America and one of the largest in the world,” and it also ordered new electric-vehicle charging infrastructure for use globally.
A bevy of positive news helped launch Tesla’s stock to an all-time high. Earlier on Monday, Hertz announced the company had ordered 100,000 Tesla vehicles, set for delivery by the end of 2022. Hertz said it was setting out to “offer the largest EV rental fleet in North America and one of the largest in the world,” and it also ordered new electric-vehicle charging infrastructure for use globally.
While Hertz is in the early stages of electrifying its rental car fleet, Tesla getting an order of this magnitude highlights the broader EV adoption underway in our opinion as part of this oncoming green tidal wave now hitting the U.S.,” wrote Wedbush analyst Dan Ives in a note Monday morning. “While China and Europe have been ahead of the U.S., it appears demand is accelerating for EVs domestically with Tesla leading the charge and OEMs including Lucid Motors, GM, Ford, Faraday Future, and many others chasing after this $5 trillion market opportunity over the next decade.”
Separately, Tesla’s Model 3 also catapulted to the top, earning the title of top-selling European car last month, and became the first electric vehicle to do so on a monthly basis in the region, according to a new report from the research organization JATO Dynamics. Tesla’s Model 3 sales jumped by 58 per cent over last year to reach nearly 25,000 in Europe alone, exceeding the more than 18,200 sales of the Renault Clio, which came in at second-best selling car.
The update also came after Tesla reported record third-quarter deliveries globally earlier in October, with the company managing to push through widespread chip shortages and other supply-chain challenges to hand over nearly 241,400 vehicles in the three months ended in September. These were, in turn, driven again by the more affordable Model 3 and Model Y vehicles.
This all-time high in deliveries, combined with cost-cutting measures, helped Tesla post a third straight record quarterly profit for its fiscal third quarter. In its earnings report last week, Tesla also reiterated its previous guidance to achieve 50 per cent average annual growth in vehicle deliveries over a multi-year horizon.
The combination of updates has also driven a number of analysts on Wall Street to become more bullish on the stock. On Sunday, Morgan Stanley analyst Adam Jonas raised his price target on Tesla stock to $1,200 from $900, representing one of the highest on Wall Street. He also reiterated an Overweight rating on the stock.
In his note announcing the update, Jonas noted that Tesla’s third-quarter results “were significant for two main reasons,” with the first being “extraordinary top-line growth despite industry-wide supply shortages,” and the second being Tesla’s “industry-leading profitability.
“Tesla’s 23 per cent adjusted EBITDA margin puts it at the very top of high volume OEM margins (i.e. excluding Ferrari),” Jonas said. “Tesla is making over $10K of EBITDA per car globally in one of the most difficult supply chain environments ever seen by the industry.” – Inside Business Online