The stock market value of electric car maker Tesla has hit $100bn for the first time, capping a dramatic rally that has seen its share price rise 125 per cent in the last three months.
The moment came on Wednesday as Tesla opened more than 4 per cent up from the day before at $571, valuing it at $103bn.
The stock market milestone marks a moment of vindication for Elon Musk after a controversial period in which he appeared almost at war with Wall Street.
In 2018, after battles with short sellers, the Tesla chief falsely claimed that he was close to a buyout at $420, with “funding secured”. He later gave up the chairmanship as part of a settlement with regulators.
If Tesla’s market cap averages $100bn or more for six months, Mr Musk will be able to cash in on the first $346m instalment of a ten-year share bonus plan. The value of his stake in the company has gained nearly $15bn since a low point last June, valuing it at $21.7bn.
Mr Musk’s stock market milestone comes days after his rocket company, SpaceX, completed a test that puts it on track to become the first private company to take astronauts into orbit. President Trump compared him to serial inventor Thomas Edison on Wednesday, telling CNBC he was one of the world’s “great geniuses”.
Tesla’s $103bn market capitalisation — the most widely followed measure of a company’s value, based on the total value of its outstanding shares — is about twice that of General Motors, the second-most valuable US carmaker.
However, GM is still ahead in terms of enterprise value, which takes into account a company’s net cash or debt position and provides a more accurate measure of the value of its underlying business. Based on that measure, General Motors’ $130bn compares to Tesla’s $110bn.
On average, only three large companies a year see their shares double or more in the space of six months, as Tesla’s have now done, according to Toni Sacconaghi, an analyst at Bernstein. Those periods of outperformance are normally followed by a less profitable period, with shares rising 2.6 per cent over the following six months.
Tesla went public at $17 a share in July 2010. Anyone holding shares since then has seen a 33-fold increase in their investment, compared to a three-fold increase in the broader US stock market.