[ad_1]
This week, it was announced that Tesla (NASDAQ: TSLA) will join the S&P 500 Index on December 21. The news pushed the stock up to nearly $ 100 in just two days, with most of the surge coming directly after Tuesday’s announcement. While it’s impressive enough that Tesla is finally included in the S&P, some finer points are not discussed, such as Tesla’s young age compared to other companies in the index and its massive size prior to the inclusion date. .
Tesla’s performance in 2020 on Wall Street has been more than impressive, and it was only a matter of time before larger and more prestigious investment indices sought to acquire the electric car company. After climbing from $ 86 to over $ 500 throughout the year, Tesla broke another record this week after beating its record price per share on Thursday.
Tesla could be 6th most valuable company in index
The surge in stock prices is accompanied by extreme growth in companies’ market capitalization, and the substantial increase in the price per share has largely contributed to Tesla’s valuation. If Tesla were to be added to the S&P today, it would be the sixth largest company in the index, ahead of Berkshire Hathaway and behind Alphabet Inc., the parent company of Google.
The only companies that would be considered more valuable than Tesla would be the Class A shares of Alphabet Inc., Facebook, Amazon, Microsoft and Apple, which are all leaders in their respective industries. While Apple and Microsoft can be considered a double in the tech world, the other companies are surely all leading the pack in their respective industries.
Tesla will be one of the youngest companies in the index
With the creation of Tesla in 2003, she will be 17 when she joins the S&P 500 index in December. This makes the addition of the company even more meaningful as its impact in such a short time is evident. While many of us recognize Tesla as the leader in EV technology, the company could be seen as the leader in the automotive industry. It’s just amazing considering that Tesla has only had cars on the road since 2008 and has only been a mass car maker since 2017, when the Model 3 was introduced.
However, Tesla has a huge influence over other automakers. Traditional automakers are struggling to stay relevant and admit they need to transition to electrification. With Tesla leading this charge, new tricks are taught to old dogs. It’s just a matter of whether old dogs choose to keep learning “new tricks”. If they don’t, they will slowly fade away as EVs become more popular on the road.
This is a preview of our weekly newsletter. Each week, I go “Beyond the News” and hand create a special edition that includes my thoughts on the biggest stories, why it’s important and how it might impact the future.
Many thanks to our longtime supporters and new subscribers! Thank you.
Tesla is the only automaker in the index
The S&P 500 companies are auto related, like Advanced Autoparts and O’Reilly, but there are no other pure auto companies in the index. The inclusion requirements of the S&P 500 are high, as a market cap of $ 8.2 billion, has at least 10% of its shares outstanding, its last quarter is profitable and a consecutive streak of at least four profitable quarters .
2020 has not been the most forgiving year for many companies and automakers are no exception. Demand for new vehicles has effectively fallen off the table due to the COVID-19 pandemic, and it has caused many once-successful auto companies to taste the loss of momentum. Companies that make affordable gasoline sedans are also experiencing declines in demand because people cannot afford new vehicles.
Because of this, large auto companies listed on the NASDAQ are missing out on their opportunities to string consecutive quarters and provide profitable margins to their investors. But Tesla doesn’t have this problem because their cars are more than just vehicles. They are software devices. These are new ways to get from point A to point B. And, with many people concerned about climate issues, electric cars are the only acceptable form of transportation.
Tesla joins S&P in year when growth was next to impossible
To grow on the previous points, this year was supposed to be extremely difficult for almost every business on the planet that would not increase work efficiency in the event of a pandemic. The first winners were companies like Zoom, which created possibilities for communication without being near other people. No one would have thought that a company selling more than $ 35,000 worth of cars would see such growth, but it does.
Tesla’s corporate mission tackles more than one problem in today’s world. Many investors and businesses overlook this fact: Tesla is not just an auto maker. They make solar panels, big batteries and cars. Not to mention that their energy products are suitable for both commercial and residential use, which makes them attractive for a large market.
If we could all go back to the start of the pandemic, we would bet the automakers would not be successful this year. They did not do it. But Tesla did, and that’s because their identity as a true tech company has helped them move beyond the label of “automaker” or “sustainable energy company”. Tesla is bigger than that, and when investors realize it, their wallets will benefit.
I use this newsletter to share my thoughts on what’s going on in the Tesla world. If you want to talk to me directly, you can email me or reach me on Twitter. I don’t bite, be sure to reach out!
[ad_2]
Source link