Tesla Inc on Wednesday became the first publicly listed US carmaker to cross $100 billion in market valuation, triggering a payout plan that could be worth billions for Elon Musk, founder and chief of the electric car company.
The milestone comes less than a month after Tesla’s stock crossed $420, the infamous price at which Chief Executive Officer Elon Musk had tweeted he would take the electric car maker private. Musk tweeted he had “funding secured” to take Tesla private in August 2018, when its shares were trading in the mid-$330s, only to later give up under investor pressure and regulatory concerns.
Shares in Tesla rose some 4.8% in opening trade to extend the gains in the value of the fast-growing maker of electric vehicles. Tesla shares were last up 1.4% at $555 after the bell, building on a 7.2% gain during trading when brokerage New Street Research raised its price target to $800.
Tesla, which is already valued more than Ford Motor and General Motors combined, has seen its stock more than double in the last three months, fueled by a rare quarterly profit in October -- news of production ramp-up in its China factory and better-than-expected annual car deliveries.
For achieving the first milestone, Musk will get shares worth $346 million if Tesla shares hold above $100 billion over six months, based on the formula. In announcing the plan in March 2018, the company said Musk "would receive no guaranteed compensation of any kind -- no salary, no cash bonuses, and no equity that vests simply by the passage of time" without the rise in value.
In 2019, Tesla sold some 367,000 vehicles, a rise of 50% from the prior year. That is a fraction of the 10 million sold by leading global automakers Toyota and Volkswagen, but investors have pushed up Tesla's value in the expectation that it is changing the industry.
Tesla has begun manufacturing in China and has announced a new plant in Germany that could start production by 2021. The Tesla Model 3 electric car is designed to be more affordable than its earlier models -- around half the cost of the $70,000 models -- and is fueling expectations of stronger growth.
(With agencies input)