Home

Tesla

News

What Will Inclusion In The S&P 500 Mean For Tesla And Its Investors?

Tesla may be on the verge of S&P 500 inclusion, which is a major accomplishment.

2018 Tesla Model 3

EVANNEX EVANNEX

By: EVANNEX

Jul 10, 2020 at 8:41am ET

Add InsideEVs as a preferred source in Google

Comment

This article comes to us courtesy of EVANNEX, which makes and sells aftermarket Tesla accessories. The opinions expressed therein are not necessarily our own at InsideEVs, nor have we been paid by EVANNEX to publish these articles. We find the company's perspective as an aftermarket supplier of Tesla accessories interesting and are willing to share its content free of charge. Enjoy!

Tesla Stock Continues To Soar: Analyst Predicts 750K Deliveries In 2021

Tesla Stock Shares Rocket Past $1,000: Here Are 5 Reasons Why

Posted on EVANNEX on July 10, 2020 by Iqtidar Ali

Tesla [NASDAQ: TSLA] shares have surged since the company announced its surprising quarterly production and delivery numbers — despite the . Once a small scrappy Silicon Valley startup, Tesla is now on the verge of S&P 500 inclusion.

Tesla headed to become a S&P 500 company.

Above: Tesla could be part of the S&P 500 (Source: Now You Know)

According to Reuters, "Tesla Inc appears on the verge of joining the S&P 500, a major accomplishment for Chief Executive Officer Elon Musk that would unleash a flood of new demand for the electric car maker's shares, which have already surged 500% over the past year."

At this stage, Tesla has become the world’s most valuable automaker with a market cap exceeding all other legacy automakers (including Toyota). Their market cap even exceeds old-guard, blue chip companies like oil giant Exxon Mobil.

Above: Tesla's Model Y (Image: EVANNEX, Photo by Casey Murphy)

So how can Tesla qualify for S&P inclusion? There are several factors that need to occur in order to qualify. But, if Tesla is able to squeeze out even the smallest profit, there's a real chance it could happen. And it's worth noting, Tesla just delivered 2,250 more cars than the first quarter deliveries of 2020. And remember: with fewer deliveries last quarter, Tesla was able to post a profit.

"With a market capitalization of about $250 billion, Tesla would be among the most valuable companies ever added to the S&P 500, larger than 95% of the index's existing components. It would have a major impact on investment funds that track the index," according to Reuters.

Above: A look at the exclusive club of companies that Tesla would be joining in the S&P 500 (Source: Reuters)

"You have all the index funds that have no choice but to include it," says Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. "That is one reason why [the stock] has been so strong here, in anticipation of that."

Zac and Jesse from the Now You Know YouTube channel discuss Tesla and its possible inclusion in the S&P 500 index. Demand for shares of Tesla will increase, as noted, since it will now be part of S&P 500 index funds. In turn, institutional investors are bound to snap up a good chunk of Tesla for their portfolio.

Above: Analysis of Tesla joining the S&P 500 index (YouTube: Now You Know)

Reuters reports, "Funds that attempt to identically track the S&P 500 have at least $4.4 trillion of assets, according to S&P Dow Jones, and those funds would need to buy Tesla shares quickly to avoid errors tracking the index's performance."

In addition, "actively managed investment funds that benchmark their performance to the S&P 500 will be forced to decide whether to buy Tesla shares. Such funds manage trillions of dollars in additional assets."

"Even if you don't like Tesla and you think it's overvalued, the fact that it is going into the index would mean trillions of dollars would have some kind of position," said Jim Bianco, head of Bianco Research in Chicago. "As part of their benchmark, portfolio managers would not be able to ignore it."

What do you think?

View

Comments

===

Written by: Iqtidar Ali. An earlier version of this article was originally published on Tesla Oracle. Sources: Reuters, Now You Know

Source: Evannex

We want your opinion!

What would you like to see on Insideevs.com?

Take our 3 minute survey.

- The InsideEVs team

Share this Story

GO TO COMMENTS

(

)

Got a tip for us? Email: tips@insideevs.com

View all comments ( )

Trending

Kia EV3 Lease Deals Are Here, And It’s Cheaper Than The Chevy Bolt And Nissan Leaf

I Let Android Auto Plan My EV Roadtrip. Here’s How It Worked

This Chevy Bolt Has 470,000 Miles. Here’s How Much A New Battery Was

Here's What It's Like To Take Delivery Of A Rivian R2

What Will Inclusion In The S&P 500 Mean For Tesla And Its Investors?

Tesla may be on the verge of S&P 500 inclusion, which is a major accomplishment.

Related Articles: