Tesla, the electric car company owned and run by billionaire Elon Musk, has now hit a trillion-dollar valuation, making it the sixth company in the whole of US history to achieve this status.
The company joins the likes of Apple, Microsoft, Google, Amazon, and Facebook that have already crossed the trillion-dollar valuation after its share price rose by more than 12% on Monday to close at $1,025.
This significant jump in Tesla’s share price and a subsequent rise in overall valuation is boosted by two spots of good news the company received on Monday.
The growth in Tesla’s stock price was majorly in response to the rental car giant, Hertz, announcing it had made a record order of 100,000 Teslas for its fleet. The deal is the largest-ever single order for the car manufacturer.
“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,”
Mark Fields, Hertz’s interim Chief Executive Officer
As of Friday, Tesla had a valuation that puts it at well over $900 billion. The company crossed the $1 trillion valuation milestone for the first time ever on Monday following additional remarks by influential auto analyst Adam Jonas, who recently raised his price target on Tesla to $1,200 a share.
The growing value of Tesla cars
Tesla’s current valuation is less than half of Apple or Microsoft, which have a current valuation of $2.5 trillion and $2.3 trillion, respectively. But recent streaks of solid earnings helped the car manufacturer see its stock prices grow by nearly 30% in October.
The usage of electronic cars has been rapidly increasing among consumers, and Tesla has been having a good run. The company says it sold around 500,000 cars last year but has already sold 627,000 cars so far this year.
This increase comes even as other automakers are struggling to build cars due to a shortage of microchips, and are planning to shut plants due to lack of parts.
Tesla is, essentially, running at full capacity as chips makers have been relatively sending them Tesla’s way as it is simply easier and more profitable to supply EV makers.
This latest development is coming 4 months after Tesla had to recall 285,000 of its cars in China due to cruise-control issues. However, the company still expects to sell about 1 million vehicles this year, with a 50 per cent increase in annual sales over the next four years.
Second fastest $1 trillion company
The surge in the demand for Tesla cars helped it become the second-fastest company in the world’s history to reach a $1 trillion valuation, achieving it in just 18 years.
That puts it only behind Facebook, which hit the $1 trillion mark in June, 17 years after its establishment, but considerably ahead of Alphabet’s Google, which took 21 years to reach the milestone.
Amazon, Apple and Microsoft hit the $1 Trillion market valuation after 24 years, 44 years, and 46 years of their founding, respectively.
The soaring of Tesla’s stock also saw the net worth of Elon Musk, who controls around 22.4 percent of the electric vehicle company, increase by more than $20 billion in a single day. With a present net worth of more than $250 billion, Musk is now the world’s richest man.