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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.
Higher-than-expected second-quarter vehicle deliveries, announced last week, have analysts increasingly confident the company will show a profit in its quarterly report on July 22. That would mark Tesla’s first cumulative four-quarter profit, a key hurdle to be added to the S&P 500.
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.
While analysts and investors have recently become more confident of Tesla’s addition, an S&P Dow Jones spokeswoman declined to comment about specific changes to the index.
Howard Silverblatt, a senior index analyst at S&P Dow Jones, had to look back to the dot-com era to recall a comparable situation. In 1999, Yahoo surged 64% in five trading days between the announcement that it would be added to the index on Nov. 30 and its inclusion after the close of trading on Dec. 7. Yahoo’s market capitalization at the time was about $56 billion.
“The lesson learned from Yahoo was that when you have an up and coming issue that may possibly go into the index, you should already own a little of it,” said Silverblatt. “If you had to get into that stock, you were paying a heck of a premium compared to owning it a week earlier.”
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.
Ivan Cajic, head of index & ETF research at Virtu Financial estimates index managers would need to own roughly 25 million shares of Tesla stock, currently worth $34 billion.
“You have all the index funds that have no choice but to include it,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “That is one reason why it has been so strong here, in anticipation of that.”
Additionally, 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.”
Up 43% in just the past eight sessions, Tesla is among the most loved - and hated - stocks on Wall Street. It is the U.S. stock market’s purest play bet on the rise of renewable energy and the decline of fossil fuels, and Tesla’s Model 3 sedan has made major inroads among consumers.
However, short sellers are betting $19 billion that Tesla’s shares will fall, the largest short level on record for a U.S. company, in dollars, according to S3 Partners.Bears point to looming competition from Porsche, General Motors and other longer-established rivals. They are also skeptical of Tesla’s corporate governance under Musk, who in 2018 agreed to pay $20 million and step down as chairman to settle fraud charges.
Traders betting Tesla could be added to the S&P 500 have almost certainly contributed to the recent rally. However, Bianco warned that the stock could reverse if Tesla is not added to the S&P 500.
Whether or not Tesla is a good [size=13px]long term[/size] investment one thing is for sure, all-electric vehicles will, (and already has, of course), dramatically change the face of the world's auto industry. Now is the time to begin research into where future investments shall go. Any potential [size=13px]investments[/size] to watch?
Too hilarious. Not good investment advice. I was thinking more of those first and second tier suppliers of the e-car manufacturers. Maybe, repeat maybe, some small amount, say $100,000, with Nikola at an appropriate time.
With regard to speculative future technology development, I doubt if hardly anyone 'knows what they're doing'. It's not about diversification, per se. It's about know being able to predict what the winning lottery number is going to be years .... even decades .... in advance. So you bet on a basket of eggs instead of just one single egg.
And as much as it pains me to say it, I agree with the comment above about looking at the enabling technologies and suppliers .... sensors, motors, infrastructure, etc. .... not necessarily the few companies that might be 'big winners' on the final products (Tesla, for example).
First, because some people think that having more shares means having a bigger piece of the pie. It doesn't, obviously, but what people think or feel emotionally, doesn't always makes sense.
The bigger reason though is that some people think a split makes the stock more accessible to people, more affordable, and that will increase volume and/or drive price up, separate from any business reason or change in financial fundamentals. It's a short-term phenomena.
Basically it comes down to caveman emotion .... 'Stock split good; Me buy more. :grunt: '
Check when Apple announced their 4:1. Same spike. Up 13% since July 31st.
Tesla’s lawsuit against former employee Martin Tripp has taken an unusual turn.
After publishing a large number of documents and videos online over the last week, including many under a confidentiality order in the case, Tripp has now fired his lawyers and will represent himself moving forward. Notably, this action coincided with the revelation that a TSLA short seller, The Funicular Fund, LP (dba Cable Car Capital LLC), was financing Tripp’s legal defense.
The case has been ongoing since 2018 wherein Tesla filed a complaint alleging that Tripp, a former process technician at Gigafactory 1 in Nevada, had stolen several gigabytes of confidential trade secret information and transferred it to third parties. Tripp denies wrongdoing and claims to be a whistleblower reporting evidence of securities fraud and concerns over safety during early Model 3 manufacturing. He has further filed a counterclaim against Tesla in the case, alleging defamation.
Following a report published by Bloomberg revealing Car Capital’s financial role in the case, Tripp took to Twitter to both double down and explain his actions.
Wait so while Wall St is crying about "lack of demand" they're actually in the middle of potentially record deliveries!? And now that they've made all the money they can by pushing the stock price as low as it would go by spreading FUD, they're now trying to make money off of the recovery. How is this legal?
The stock price drops 5% every time some uninformed analyst makes an uninformed Tesla is doomed prediction meanwhile Tesla is close to having a record quarter. The stock price is so detached from reality. isn't the SEC supposed to stop people from spreading lies to manipulate the stock price? They rightfully went after Elon, how is this shit legal!?
The Financial press also ignored any good news from Tesla over the past 6 weeks or any good news was spun as a negative. Tesla closes on the purchase of Maxwell likely giving them a significant advantage of their few competitors which are already far behind them and it's not even mentioned. I checked the Robinhood app and Apple Stocks app that day for any coverage on that and there was nothing. Little to no mention on their rapid, faster than even Elon predicted, progress on Gigafactory 3, little if any mention of the large amount of pre-orders for the Model 3 in China, or the fact that they're now selling in Australia, Japan, and New Zealand. How about the Model 3 is selling more than the other top 19 EVs combined, best selling vehicle in Switzerland, and Norway, BMW shareholders are getting upset that they can't compete with Tesla, Model 3 wins in Motor Trend shootout between BMW 330i, and Genesis G70, considered the best Luxury Sedan on the market. No one cares, those aren't signs they have a massive success on their hands at all because an uninformed financial adivor who wants to make money off of shorting their stock is going to say whatever it takes to do that so let's all listen to him.
Originally Posted by AZuser
Analysts are not company insiders. They're using publicly available info to base their reports and opinions on.
Musk, on the other hand, is a company insider. He also disseminated factually inaccurate and misleading information (funding to take Tesla private had never been "secured").
If you can make a case for Trump spreading BS that tanks Amazon's stock price then you should be able to say the same for these idiots. It's illegal to spread "misleading information" about a stock, you can make a case that cherry picking data that suits your view point and not presenting all the facts is misleading. It's no different than what paid climate change deniers do all the time, mislead the public by cherry picking the data, not looking at the entire picture.
Just because you don't like their interpretation of the newly available data doesn't mean they're cherry picking and intentionally manipulating the stock.
Again, do your own research and due diligence.
Another way to look at this: They did Tesla bulls a favor. Now they can buy TSLA for much less than they would have at the beginning of the year. I got a 50% discount.
Originally Posted by #1 STUNNA
Well that's the thing, intent is hard to prove, they know that, that's how they get away with it. Either they're intelligent portfolio managers intentionally manipulating the media and market to make a quick buck, or they're uninformed morons who suck at investing and don't deserve to be handling people's investments. I'll assume since they do this for a living and Merrill Lynch, etc hires these guys then they know what they're doing.
This video perfectly explains the BS that goes on in the stock market, and how it's detached from reality, and being gamed by hedge fund managers, including going on CNBC to knowingly spread FUD to make an extra buck. Shit is so fucked and the SEC does nothing about it!
07-06-2020, 02:12 PM
For a graphic on Yahoo's 1999 S&P 500 debut: tmsnrt.rs/3iOlA8o
