A few days after Tesla became the most valuable vehicle manufacturer in the U.S., it set another record when its market capitalization surged past $100 billion. It's the only U.S. carmaker to be valued so high.
As of trading Thursday (23 January) Tesla's valuation stood at $103.4 billion. Since the start of 2020 shares of Tesla's stock have been surging and are up more than 34%. Its market capitalization exceeds the combined valuations of Ford and General Motors.
Musk gets a windfall
It's a far cry from a few months ago when Tesla's shares were slumping over manufacturing mishaps and concerns it was burning through too much cash. With its Chinese plant finished ahead of schedule and already churning out electric vehicles and with demand surging, investors have been clamoring to get in on the stock.
For Tesla's founder and CEO Elon Musk, the rise in the company's market value doesn't only give him bragging rights and the ability to get even with short-sellers who had long bet on his demise. Musk stands to make hundreds of millions of dollars due to an option in his executive compensation.
Once Telsa hits a market value of $100 billion, Musk has the option to purchase 1.69 million shares of the EV maker's stock at $350.02 a share. According to the Associated Press, that amounts to more than $371 million if he sold the shares. Tesla's market cap has to remain at or above $100 billion for six months in order for the options to vest. The CEO could also get more stock options as the market value increases in $50 billion increments, noted the Associated Press.
Demand for EVs surging
Tesla's fortunes have been improving ever since its third quarter when it reported a surprise profit. Demand for electric vehicles has been heating up and with Tesla the undisputed leader it has been a big beneficiary. In the fourth quarter, Tesla said it delivered 112,000 vehicles across the globe during the fourth quarter, higher than the 106,00 vehicles Wall Street had expected it to deliver. For the year Tesla said it delivered 367,500 vehicles, up 50% from 2018 when it delivered 245,240 vehicles.