Tesla rents a runaway $1 trillion valuation

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A logo of the American car rental company Hertz is seen at Bordeaux Airport in Merignac, Southwestern France, February 4, 2016. REUTERS/Regis Duvignau/File Photo GLOBAL BUSINESS WEEK AHEAD PACKAGE - SEARCH 'BUSINESS WEEK AHEAD NOV 7' FOR ALL IMAGES - S1AEULJXRPAC

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NEW YORK, Oct 25 (Reuters Breakingviews) - Tesla (TSLA.O) boss Elon Musk is prone to exaggeration. read more Some of his company’s investors are on the same page: hence a runaway stock price valuing the electric-car maker at well above 100 times estimated earnings, more than triple the S&P 500 index’s ratio. Yet a 13% surge on Monday that pushed Tesla’s market capitalization over $1 trillion adds to some justifiable underpinnings.

The surge followed news that car-rental outfit Hertz would order 100,000 Teslas by the end of 2022. Those sales are worth at least $4.4 billion, by a Reuters tally, around 6% of the revenue analysts polled by Refinitiv expect Musk’s business to pull in during 2021. read more

The move into EVs is also a big statement from Mark Fields, the former Ford Motor (F.N) chief executive who just took the wheel on an interim basis at Hertz, shortly after it emerged from bankruptcy. The most eye-catching effect, though, is to make Tesla's sky-high valuation a little less far-fetched. (By Richard Beales)

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Editing by Jeffrey Goldfarb and Katrina Hamlin

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