• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • About Us
  • Contact Us
IRA vs 401k

IRA vs 401k

Retirement Options

  • Home
  • Roth IRA
  • Roth 401k
  • SEP IRA
  • Simple IRA
  • 401K
  • Finanace
You are here: Home / Finanace / Buying Tesla stock? Here’s what one analyst says as it enters the S&P 500

Buying Tesla stock? Here’s what one analyst says as it enters the S&P 500

December 21, 2020 by Retirement

Tesla Inc. is set to join the U.S. equities’ major leagues after Monday’s opening bell, a relatively routine move turned unprecedented by the sheer size of the Silicon Valley electric-car maker’s market valuation.

Tesla
TSLA,
+5.96%

is by far the largest company to be added to the S&P 500 index
SPX,
-0.35%
.
Come Monday, when it starts trading on the benchmark, it likely will be the sixth-largest company on the index by market value, currently well above $600 billion.

The stock rallied on Friday, setting a new closing record of $695. Nearly 200 million shares changed hands, Tesla’s fifth-ever largest volume and its highest volume since early February. The stock was the best performer and most active stock on the Nasdaq 100
NDX,
-0.11%

on Friday.

There is “strong precedence” for gains for stocks before their S&P inclusion and after the announcement, but very limited precedent for near-term outperformance after the inclusion, analyst Toni Sacconaghi at Bernstein said in a recent note.

And since Tesla’s fourth-quarter sales report in early January aren’t expected “to be a blowout, we would recommend that investors take short-term profits going into Dec. 21,” he said.

Tesla’s stock fell 5.3% in premarket trading on Monday, while futures
ES00,
-1.69%

for the S&P 500 fell 1.9%.

The 50 largest additions to the S&P500 index since 2010 have on average “outperformed strongly” before their announced inclusion in the S&P, outperformed an additional 3% between announcement and inclusion, and “modestly underperformed” in the days and months following inclusion, Sacconaghi said.

On average, the new entrants fell 1.7% in the six months post inclusion, he said.

Thus far, Tesla’s appreciation has been the more spectacular, including more than 230% over the past six months, when hopes were high the company would join the index after meeting criteria that included longer-term profitability.

So far this year, Tesla shares have gained 731%, which compares with gains around 15% for the S&P.

S&P Dow Jones Indices announced Tesla’s inclusion on Nov. 16, after snubbing the company in an earlier rebalance. Underscoring the complexity of adding the company, it consulted with investors on how to go about it, ultimately deciding to add Tesla all at once.

Since then, Tesla has seen its shares rise more than 60% and add nearly $200 billion in market cap to today’s $625 billion, about 10 times General Motors Co.’s
GM,
-2.43%

and 18 times Ford Motor Co.’s.
F,
-1.43%

See also: Tesla debt edges close to investment-grade rating at S&P

Joining the S&P puts Tesla in countless index-tracking funds, rippling to the many managed funds that have had to add Tesla to their holdings to balance them.

It is likely that most repositioning will take place after Monday, Sacconaghi said.

In addition to the imminent addition to the S&P 500 index, Tesla got good news on its corporate debt front late Thursday.

S&P Global Ratings upgraded its rating on Tesla bonds to BB, leaving the company’s measure of creditworthiness only two rungs away from the coveted investment-grade classification.

Filed Under: Finanace

Primary Sidebar

E-mail Newsletter

More to See

Tax Advantages of IRA and 401(k) Accounts

Exploring the Tax Advantages of IRA and 401(k) Accounts

July 18, 2023 By SEO Robot

Choosing Between IRA and 401(k): Making the Right Retirement Savings Decision

July 18, 2023 By SEO Robot

How do you pay taxes on a Roth conversion?

Traditional IRA vs 401(k): Understanding the Differences and Making Informed Retirement Choices

July 18, 2023 By SEO Robot

IRA vs 401(k)

IRA vs 401(k): Understanding the Differences and Making Informed Retirement Choices

July 18, 2023 By SEO Robot

How a Limo Service Can Make Your Trip More Comfortable

February 1, 2023 By seo_automation_owner

The Roth IRA

November 30, 2022 By Retirement

How much should I put in my 401k per paycheck?

How much should I put in my 401k per paycheck?

September 6, 2022 By

Footer

  • Privacy Policy
  • DMCA
  • Cookie Privacy Policy
  • Terms of Use
  • Google News

Recent

  • IRA vs 401(k): Understanding the Differences and Making Informed Retirement Choices
  • Traditional IRA vs 401(k): Understanding the Differences and Making Informed Retirement Choices
  • Choosing Between IRA and 401(k): Making the Right Retirement Savings Decision
  • Exploring the Tax Advantages of IRA and 401(k) Accounts
  • Understanding the Differences Between IRAs and 401(k) Plans