Oct 26, 2021 - Economy

Tesla hits $1 trillion market cap after massive Hertz purchase

Tesla market value
Data: YCharts; Chart: Kavya Beheraj/Axios

Tesla joined one of the most exclusive clubs in the world Monday when an announcement about Hertz buying its cars sent its market capitalization over the $1 trillion mark.

Why it matters: No matter how high it rises, Tesla stock always seems to be able to outperform expectations.

  • Tesla's six-month average market cap is now $686 billion — comfortably above the $650 billion maximum target embedded in a 10-year employment agreement that CEO Elon Musk signed in 2018.
  • The agreement also includes operational milestones. Musk has already met seven of them, with another three "probable," according to an SEC filing. Assuming that Tesla's market capitalization remains above $650 billion, then Musk will be fully paid out, earning 20.3 million shares of stock, way ahead of schedule.
  • Those shares are worth about $21 billion as of the close of trade on Monday.

By the numbers: Tesla stock was trading at $408 per share when S&P announced in November 2020 that it would finally be joining the S&P 500. The announcement precipitated a massive rally in the shares, which were trading at $650 on Dec. 21, 2020, the date Tesla actually joined the index.

  • Index fund investors don't seem to have overpaid: At $1,024.86 per share as of the close of trade on Monday, the car company has outperformed the index by more than 34 percentage points.

The bottom line: The only other companies in the world worth more than $1 trillion are Apple, Alphabet, Amazon, Microsoft and Saudi Aramco. That's pretty exalted company for Tesla to be in.

Go deeper: How Hertz's big Tesla deal could boost EV adoption for everyone

Go deeper