Tesla Inc. (ticker: TSLA) has become the latest company to surpass a market capitalization of $1 trillion. This came after the company’s shares jumped for a fourth straight session on Monday, closing the day higher by 12.7% to reach $1,024.86 per share. The company’s stock has risen 42.83% year to date, outperforming the S&P 500’s 21.6% rise over that same period. Tesla’s stock is up 1.18% today, trading at $1,037.00 a share.
With a market capitalization of $1.03 trillion, Tesla an exclusive club of mega-cap technology companies like Apple Inc. (ticker: AAPL), Amazon.com Inc. (ticker: AMZN), Microsoft Corp. (ticker: MSFT), and Google’s parent company Alphabet Inc. (ticker: GOOG, GOOGL). Social network giant Facebook Inc. (ticker: FB) was last a member of this $1 trillion club but fell out late last month.
Multitudes of positive news are attributed to the surging of Tesla’s stock to a new all-time high. Yesterday morning, car rental company Hertz (OTCMKTS: HTZZ) announced the order of 100,000 Tesla vehicles, with these set to be delivered 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.
Speaking about this hefty order, Dan Ives, Senior Analyst at Wedbush Securities wrote in a note to investors, “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.,”
He added, “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.”
Another good news from Tesla is that last month, the company’s Model 3 vehicle was named the top-selling car in Europe, becoming the first Electric Vehicle (EV) to do so every month in the region, according to a new report from the research firm JATO Dynamics. Tesla’s Model 3 sales jumped by 58% 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 as the second-best-selling car.
Early this month, Tesla reported record third-quarter deliveries globally, with the company managing to overcome the ongoing chip shortages and other supply-chain challenges to deliver nearly 241,400 vehicles from August to 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 third quarter of the 2021 fiscal year (Q3 FY2021). Last week, Tesla released its Q3 FY2021 earnings report in which it reiterated its previous guidance to achieve 50% average annual growth in vehicle deliveries over a multi-year horizon.
This combination of updates of good activity especially in the third quarter has influenced numerous Wall Street analysts to become more bullish on Tesla stock, issuing “Buy” or equivalent ratings.
On Sunday, October 24, 2021, Adam Jonas, an analyst at investment and financial services firm Morgan Stanley (ticker: MS) raised his price target on Tesla stock to $1,200 from $900, representing one of the highest on Wall Street. Jonas also reiterated that Tesla stock could carry an Overweight rating in a note he wrote to investors.
Jonas said that Tesla’s Q3 FY2021 results “were significant for two main reasons; extraordinary top-line growth despite industry-wide supply shortages, and Tesla’s industry-leading profitability.”
“Tesla’s 23% adjusted EBITDA margin puts it at the very top of high volume OEM margins (i.e. excluding Ferrari). Tesla is making over $10K of EBITDA per car globally in one of the most difficult supply chain environments ever seen by the industry,” Jonas said.