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Already riding a wave of good news from the week prior, Tesla's stock price surges to new highs with rental company Hertz's order of 100,000 cars for its fleet.

26 Oct 2021 | International News : USA


It was never a matter of "if", but "when". 

Coming off the back of a spate of largely good news, Tesla’s market value raced forward overnight to hit USD $1 trillion for the first time. In doing so, Tesla has now joined an extremely rarefied field, occupied only ever by the largest of names in tech. Currently, Amazon, Apple, Microsoft and Alphabet (Google’s parent company) reside in the trillion-dollar club. 

The entry-level Model 3 continues as Tesla's golden boy with its latest addition to Hertz's rental fleet
As noted last week, the electric automaker had already been enjoying a wave of positive press due to its most successful quarter on record, both in terms of deliveries and profits.

Further good news followed at the start of this week; reports showed that the Tesla Model 3 had leapfrogged all other competitors - electric and otherwise - to become the bestselling model, period, in Europe in September. It became the first ever EV to top the sales charts in the process.

The final push over the 1,000,000,000,000 line (yes, that’s how 1 trillion looks like when written out in full), however, has been attributed to another American giant. Rental company Hertz announced on 25 October 2021 that it had ordered 100,000 Model 3s as part of efforts to electrify its fleet, to be delivered in full by 2022. According to the BBC, the deal will amount to USD $4.2 billion. 

Of course, the concept of market capitalisation (or value) has always been a bit of an unwieldy thing to get into. "Isn’t Toyota the biggest carmaker in the world?", you may ask. And you wouldn't be wrong - if we were looking purely at the market share of vehicles sold and vehicles on the road.

Tesla's market cap has long outstripped those of legacy carmakers such as Toyota and Volkswagen
Simply put, however, the valuation of a company is beholden to its stock price. As such, it is determined as much by the speculative forces of the stock market - a sort of assessment, or anticipation of a company’s performance - as it is by more straightforward considerations such as, say, its sales figures (although the latter often comes into play).

Consequently, the situation can change very quickly; just last month, a six-hour server failure was enough to wipe off $40 billion in market valuation for Facebook - previously also a trillion-dollar club member - for example.

Still, the fact that Tesla’s stocks - not Teslas - are on fire, as one commenter said, demonstrates that the market is feeling more confident than ever: That there are still good things to come for the EV-maker. How long Tesla will be able to hold on to its $1 trillion market cap is uncertain, but what is certain is that it will almost definitely be able to rejoin the club should it ever fall out.

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