Tesla is worth $100 billion

Well, this happened. The firm finished the trading day with a $100 billion market cap. Not only does this mark a major milestone for the firm, but sets up a big payday for CEO Elon Musk.

Tesla stock shot up more than 8% in intra-day trading Wednesday, sending the market cap to more than $107 billion before the stock lost some of its gains to finish the day up 4% with a market cap of $102.7 billion.

In 2018, the board authorised a neat compensation plan for Musk, allowing him to earn equity options that could be well worth over $55 billion over the next decade. Currently, Musk does not draw a salary, although he owns around 20% of Tesla.

The payout kicks in if the firm’s market cap is above $100 billion, both on a 30 day and a six-month trailing average. Moreover, the company also has to hit annual revenue and EBITDA milestones in order for Musk to get the first tranche worth $286 million.

The company must also hit annual revenue or EBITDA milestones at the same time in order for Musk to get that first tranche. The company would need to report either trailing four-quarter revenue of $20 billion or EBITDA (minus stock-based compensation) of $1.5 billion.

At a market cap greater than $100 billion, Tesla is worth more than General Motors and Ford combined.

The stock is up over 30% in 2020, and the first month of the year isn’t even over yet. We’re still waiting to see fourth-quarter results, which will be with us on January 29. This is the month when one could win or lose BIG on Tesla’s rally. If you're invested in the stock, long or short, I'd love to know what your thesis is! Reply to the email and we can maybe post some interesting perspectives here.

The stock closed at $569.56, up 4.09%.

Bank of Canada Open to Rate Cut

Stephen Poloz, the governor of Bank of Canada said the door is now open for the Canadian central bank to cut interest rates if the current economic slowdown persists.

The rate decision came out today and left rates unchanged at 1.75%. Even though the doors for a rate cut are open for the future, the current decision reflects caution against rising household debt levels.

“I’m not saying that the door is not open to an interest rate cut, obviously it is, it is open,” Poloz said when pressed on the issue, adding borrowing costs remain “appropriate” for the time being.

All things considered, “it was Governing Council’s view that the balance of risks does not warrant lower interest rates at this time,” Poloz said. “Clearly, this balance can change over time as the data evolve.”

The Bank of Canada did cut rates in October, and officials said that it was more an insurance than a counter to a growing risk. A rate cut in the future would happen for different reasons than the one in the past.