Tesla's Trillion Dollar Market Cap: What's Going On?
Tesla hit a major financial milestone in late October 2021: a market cap of $1 trillion. Only four other U.S. companies have seen stock prices soar high enough for that claim, and they're all tech companies: Apple, Amazon, Google and Microsoft.
So how does an indie automaker — or any automaker — rise to these ranks? Read up on some factors in Tesla's stock climb below before deciding if you want to bet on continued performance from TSLA as an investor.
TSLA Is Backed By Personality
No other automaker and only a rare few large companies are synonymous with their founders or leaders. But you can't think of Tesla without also thinking of Elon Musk, and the enigmatic CEO captures the imagination of the public and investors alike.
If you look at historic pricing for TSLA, it climbed quickly from around $400 in November 2020 to around $880 in early January 2021. That's around the time Musk was cheering on Dogecoin hijinks via Twitter. While other market factors were certainly at play, Musk's seeming willingness to join in with the individual investor may have stirred up interest among smaller investors.
It Also Posts Strong Earnings
There's definitely not a case of all play and no work with Tesla, though. Tesla was able to beat back supply chain challenges and raise global deliveries of electric vehicles by 73% year-over-year in Q3 of 2021. That translated to record profits — for the third quarter in a row.
Tesla Is a Mover and Shaker Among Brands
Interbrand publishes an annual report on the best global brands, listing the top 100. The top players include Apple, Amazon and Microsoft. In 2020, Tesla wasn't even in the top quarter. But it made a historic jump in just one year, rising 26 spots to settle in at number 14 for 2021. Tesla actually holds the spot just above Facebook on the report.
The Analysts Remain Bullish on TSLA
Strong earnings and stellar performance in industry reports are just a few reasons Wall Street analysts and investors are bullish on TSLA. That confidence lends the stock some buoyancy and may help sustain positive performance.
A Reported Hertz Deal Drove It Over the Top
While Tesla stock prices have been rising since the summer after some falloff in the spring, it was an announcement from Hertz that drove the stock price up more than $100 per share (and helped TSLA hit the $1 trillion market cap mark).
Hertz announced a plan to buy 100,000 vehicles from Tesla by the end of 2022. The rental car company is pivoting after bankruptcy to safeguard its brand and business for the future, which is why the sudden interest in electric vehicles. For Tesla, it's a major sales coup, and for investors, it's another reason to watch TSLA with interest.