Boom, Vroom: Tesla Market Value Exceeds $100 Billion

Tesla has reached a market valuation of over US$100 billion. (Image:  needpix /  CC0 1.0)
Tesla has reached a market valuation of over US$100 billion. (Image: needpix / CC0 1.0)

Last month, Elon Musk’s Tesla hit a market value of US$100 billion for the first time in history. As of now, the company’s market value is hovering around US$140 billion. Tesla has officially overtaken Volkswagen as the second most valuable carmaker in the world, with Japan’s Toyota being the only challenge ahead.  

Rising market value

“With Toyota valued at more than US$230 billion, Tesla shares would have to reach about US$1,250 to surpass it, assuming Toyota stock didn’t move too… Toyota and Volkswagen, on a combined basis, sell more than 50 times the number of vehicles that Tesla does. But Tesla is growing faster and is the world’s leading producer of electric cars,” according to Barron’s. Last year, Tesla sold around 367,500 vehicles. In contrast, Volkswagen’s global sales were recorded at 10,974,600 units.

Tesla’s share price has more than doubled in the past three months. The rapid rise started in October last year, triggered by an unexpected third-quarter profit. While stock owners are happy with the way prices have been increasing, the company is also the target of a large group of short-sellers who think that the shares might crash soon. In fact, financial technology and data firm S3 Partners believe that almost 20 percent of Tesla’s shares available for trading have been shorted.

Elon Musk can potentially gain US$370 million if the US$100 billion valuation holds steady. (Image: Steve Jurvetson via flickr CC BY 2.0 )

But the number of experts predicting the stock prices to rapidly decline is fast dwindling. ARK Investment Management predicts a 25 percent chance for the stock price to surge to US$15,000 by 2024 in case of a bull market, a 25 percent probability of the stock being valued at US$1,500 in case of a bear market and a 50 percent chance of the share price hitting US$7,000 provided the market conditions remain unchanged. Meanwhile, Musk seems to be preparing for a big cash out in the near future if stock prices remain steady.

“If the market capitalization remains above US$100 billion on average over a six-month period, including at least 30 consecutive days, Mr. Musk will have the option to buy about 1.69 million shares at about US$350 each — a payout worth more than US$370 million before taxes at the current stock price. Forbes and Bloomberg estimate Mr. Musk’s current net worth at about US$32 billion, about half of it composed of Tesla shares,” according to The New York Times.

Future plans

A pet project at Tesla is its robotaxi fleet. Owners of the vehicles will be able to use the company’s ridesharing app and earn money by transporting passengers. Tesla will keep up to 30 percent of the revenues from every ride. Musk predicts a million robotaxis on the road very soon. The company’s Gigafactory 4 in Germany is also coming up well.

“The first phase… is expected to be completed in July 2021, and it will support the local production of Model Y vehicles in Europe. Tesla already confirmed that it plans to eventually also build the Model 3 at Gigafactory 4, and it will presumably be at one of the three additional sections of the factory. The automaker is also planning a battery cell factory on the east side of the plant,” according to Electrek.

Musk has promised to launch a million-mile battery this year that will power Tesla cars. As the name suggests, the battery is expected to last for about a million miles. Once launched, it will be a game-changer in the electric vehicle industry as current battery packs only last about half a million miles.

Tesla’s million-mile battery will be a game-changer. (Image: Avda via wikimedia CC BY-SA 3.0)

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