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US$165B Valuation on TESLA after hitting 21% biggest single-day gain.

Tesla soared 21% single-day gain making its market value to more than US$165B. That means Elon Musk is one step closer to a record $50 billion payout.

Tesla surged as much as 20% in early Tuesday trading, extending the company’s gains after a 19.9% surge on Monday. According to reports, it was the biggest single-day gain of the company since May 2013.

Tesla (formerly Tesla Motors, Inc.), is an American electric vehicle and clean energy company based in Palo Alto, California. It was founded in 2003 by a group of engineers who wanted to prove that people didn’t need to compromise to drive electrics.

To date, Tesla develops not only all-electric vehicles but also infinitely scalable clean energy generation and storage products. Tesla believes the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better.

The increase brings Tesla’s market valuation to more than $165 Billion. Monday’s 19.9% leap was partially driven by Argus Research analyst Bill Selesky, who raised his price target to a Wall Street-high of $808 from $556 and sustained his “buy” rating on strong demand for the Model 3 sedan.

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Elon Musk, CEO, Tesla (Credits: Reuters)

Last January 2018, Tesla CEO Elon Musk was granted his outstanding compensation package. The incentive arrangement between Musk and Tesla is organized into 12 “tranches” of stock options, each equal to approximately 1% of the total number of shares outstanding at the time of the agreement. Each tranche becomes available to Musk once a certain number of operational milestones and stock market capitalization goals have been achieved.

In other words, this means that Tesla will dramatically increase its revenues and profits, while also becoming one of the most successful firms in the US stock market in order for Musk to get paid. Musk is not guaranteed a salary or any cash bonuses along the way.

The increase in the firm’s market valuation makes Musk eligible to unluck the second tranche on his mega-payout package. However, Musk is months, if not years away from reaching all the targets of the payout program, which would give him options worth a total of $50 billion.

If the gains hold, it means Tesla has cleared another hurdle of CEO Elon Musk’s massive payout package. The second milestone of Musk’s mega-compensation deal is that Tesla’s market value hit $150 billion, the third milestone is a market value of $200 billion.

Tesla stated today that its vehicle deliveries should “comfortably exceed 500,000 units” for 2020. It had already reported deliveries of 112,000 vehicles globally during its fourth quarter.

The firm’s analyst quoted Tesla’s strong fourth-quarter financial standing, which surpassed Wall Street’s standards last week. It also increased its earnings per share estimate to $8.01 from $5.96 and expects that to double by 2021.

According to the CNBC report, on a research note: “Our positive view assumes continued revenue growth from the legacy Model S and Model X, as well as strong demand for the new Model 3, which accounted for more than 80% of 4Q19 production. Despite past production delays, parts shortages, labor cost overruns, and other difficulties, we expect Tesla to benefit from its dominant position in the electric vehicle industry and to improve performance in 2020 and beyond.”