What a global impact a single large order can have is illustrated by the recent fleet purchase by world-renowned car rental company Hertz. The company bought a total of 100,000 vehicles from popular e-car manufacturer Tesla. As a result, the car company’s share price reached a new record high.
$1,000 per share
As a result of Hertz’s fleet purchase, the value of a Tesla share rose above the magic mark of a whopping $1,000. This is probably due not only to the sheer size of the order, but certainly also to the delivery deadline that the two companies have agreed upon with each other. Tesla wants to deliver the 100,000 vehicles to the rental company by the end of 2021. What has so far only circulated as a rumor through global tech and business journalism has now been officially confirmed by Hertz. Exactly which vehicles are involved is still unknown. However, if one assumes that it is exclusively the entry-level model, the Model 3, the order is likely to have a total value of just under 4.2 billion US dollars. Whereby, with this fleet size, you certainly get a volume discount that is not to be scoffed at.
Tesla increases stock market value
As the price of a share rises, of course, so does the stock market value of a company. The Hertz deal alone, which Tesla has now bagged, ensures that the e-car maker’s share price now exceeds $1 trillion. This continues Tesla’s trend for 2021. After all, the company has been floating on cloud 7 since the beginning of the year. Since one share was still worth just under 600 US dollars in May 2021, it is probably only a matter of time before the company has doubled this value. Meanwhile, the now controversial CEO Elon Musk shows surprise at this high increase in the share price. Thus he wrote on the short message service Twitter:
“Strange that the valuation has shifted, because Tesla has a problem with the production increase and not with the demand.”
A real success story
Of course, rising stock market valuations are also having a positive impact on the company’s profits. In the third quarter of this year, for example, the e-car maker reported profits of $1.62 billion. This means that the company has once again broken an in-house record. After all, the profit in the previous quarter was still 1.14 billion U.S. dollars. If you compare the results with those from a year ago, the whole thing looks even more impressive. In this case, Tesla was able to record an increase in profit of a whopping 389 percent.
But for all the positive news the company has to report, there are also some concerns that Tesla is addressing quite openly. If it weren’t for problems such as the semiconductor shortage that still prevails globally and ports that are still congested due to the Corona pandemic, the results could have been even better. After all, Tesla was only able to meet the gigantic demand for its own electric cars to a limited extent. In this regard, the company states:
“A number of challenges, including semiconductor shortages, port congestion and power outages, have impacted our ability to keep factories running at full speed.”