Tesla hits $1 trillion market cap after massive Hertz purchase
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