(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
NEW YORK (Reuters Breakingviews) – Tesla boss Elon Musk is prone to hype. Some of his company’s investors are on the same page: hence a runaway stock price valuing the electric car maker well above 100 times estimated earnings, more than triple the ratio of the S&P 500 index. Still, a 13% increase on Monday that pushed Tesla’s market cap to over $ 1 trillion adds to some justifiable rationale.
The increase followed the announcement by car rental agency Hertz https://newsroom.hertz.com/2021-10-25-Hertz-Invests-in-Largest-Electric-Vehicle-Rental-Fleet-and -Partners-with-Seven- Time-Super-Bowl-Champion-Tom-Brady-to-Headline-New-Campaign would order 100,000 Teslas by the end of 2022. These sales are worth at least $ 4.4 billion, According to a Reuters tally, about 6% of revenue analysts polled by Refinitiv expect Musk’s business to grow in 2021.
The switch to electric vehicles is also a big statement from Mark Fields, the former chief executive of Ford Motor who just got behind the wheel https://newsroom.hertz.com/2021-10-05-Hertz-Names-Mark- Fields-as- Interim CEO at Hertz, shortly after coming out of bankruptcy. The most eye-catching effect, however, is to make Tesla’s sky-high valuation a little less wacky. (By Richard Beales)
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(Edited by Jeffrey Goldfarb and Katrina Hamlin)
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