The S&P 500 Will Be Electrified By Tesla

Reuters reported that Tesla is on the verge of joining the S&P 500 which is a major achievement for any company. This would “unleash a flood of new demand” for Tesla’s stock shares which are currently trading at over $1,500 per share. Tesla just broke this record a few minutes ago.

If you compare Tesla to Google, it’s clear to see that Tesla will surpass Google’s stock prices.

 

Last week Tesla announced higher vehicle deliveries than was expected and Reuters noted that this has analysts becoming increasingly confident in Tesla’s profitability in its second-quarter report scheduled for July 22. This would mark Tesla’s first cumulative four-quarter profit which is a key qualification to being listed in the S&P 500.

Tesla’s current market capitalization is around $250 billion which would make Tesla one of the most valuable companies ever added to the S&P 500. Reuters noted that it would be larger than 95% of the index’s existing components and would have a huge impact on investment funds tracking the index.

graphic by Reuters

 

Yahoo and Tesla Comparison.

Reuters posed the question as to whether or not Yahoo could be a model for Tesla’s potential S&P 500 debut. Howard Silverblatt, a senior index analyst at S&P Dow Jones, looked back to the dot-com era and recalled the comparable situation. In 1999, Yahoo surged 64% in five trading days between its announcement of being added to the index and the actual inclusion after the close of trading. At that time, Yahoo’s market value was around $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. If you had to get into that stock, you were paying a heck of a premium compared to owning it a week earlier,” Silverblatt explained.

 

Short Sellers Continue To Risk More

As the Tesla stock price continues to soar, Tesla’s short-sellers are risking even more. The amount of money they have risked has reached record levels, according to Reuters. The graph below shows that short-sellers have risked a total of $19 billion so far.

Credit S3 Partners, Refinitiv

 

This bet, that Tesla will fall, is the largest short level on record for a U.S company according to S3 Partners. Tesla critics believe that the looming competition from Porsche, GM, and other legacy OEMs will bring about Tesla’s ultimate demise. They are also very critical of Elon Musk and often stalk him and his customers on Twitter. I’ve been targeted as well by some of these fanatical, cult-like short sellers.

Tesla’s value has been seen by its supporters for years, but Tesla is probably the only company in the U.S. that has both ardent supporters and haters. The rivalry is worse than that of the NFL’s Saints and Falcons rivalry. As a Saints fan who lived in Atlanta, I was never told by Falcons fans to end my life or that I am a horrible person. No one attacked me on a personal level at all. If anything, we all just had fun with it–after all, it was a game. In the end, we are all adults and once the game was over, it was back to life.

Regarding Tesla, there’s more at stake: $19 billion to be exact. It’s no wonder they make threats to blow up the Fremont factory or make anonymous death threats on both Twitter and email to Tesla fans. These short-sellers are about to lose everything and they have no one to blame but themselves.

 

Tesla’s Products Are Why So Many People Love It

When you create a product that solves many problems, is fun and engaging, and is designed beautifully, it will take the world by storm. Your customers will tell their friends and family. Their friends and family will buy from you and this cycle will continue.

This is the core reason why Tesla is so valuable today. It has nothing to do with the competition, Tesla killers, or the fact that it’s only been around 16 years. It has everything to do with the creation itself.

It’s CEO not only listens and acknowledges his company’s supporters and customers, he gets on stage and dances in joy because the crowds asked him to. He seeks advice from his customers regarding product critiques, ideas, and how to make his products better.

 

Tesla Will Be Listed On The S&P 500–Whether This Year Or Eventually.

Tesla has upgraded the auto industry into an industry worthy of the 21st Century.  However, Tesla had to face its own problems and challenges in order to do this. It didn’t just take on one industry, but multiple. By integrating solar and battery technology, Tesla has taken on both the energy and battery industries. By developing its own AI chip for autonomous cars, Tesla has taken on the tech industry as well. 

This is why, in my opinion, that Tesla will eventually be added to the S&P 500. It may be this year or next, but it will happen. Tesla’s valuation is too big for the index not to want it listed. And the company’s ability to focus on the product while literally having naysayers yelling, “You’re going bankrupt!” in your face 24/7 just shows how resilient the driving force and focus of Tesla is. It also shows just how dedicated Tesla is to its mission: to accelerate our transition to sustainable energy.

Tesla will indeed electrify the S&P 500 once it’s been listed.

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