Tesla Not (Yet) Admitted to S&P 500 Index

September 15, 2020 James Heinsman In the News

Tesla Model 3 interior. Photo courtesy of Leo Nguyen


Investors in Tesla have once again experienced disappointment with the decision by the S&P 500’s index committee’s decision to leave Tesla once again out of the respected index.

Hope is not completely extinguished for Tesla cheerleaders. It often happens that mergers of other companies already on the index will leave a space for the iconic autonomous car manufacturer.

As a matter of fact, mergers are the most common reason that companies fall off the index. If such a merger were to occur, Tesla would have a better shot at inclusion.

Not everyone thinks Tesla should have a place in the S&P 500, wondering if the company’s earnings are really good enough.

One analyst, Tim Ghriskey of Inverness Counsel, said that Tesla “will go into the S&P. There’s no way it cannot at some point. Maybe it’s in the penalty box right now while they assess the situation.”

Adding that Tesla’s valuation “seems absolutely crazy”, he also said that they cannot be ignored.

One of the conditions for entry into the S&P 500 is four consecutive quarters of profit, a condition that Tesla finally met this past July. Investors then believed their favorite company would be have earned its entre into the index, which also led to a significant uptick in the price of Tesla shares.

But instead, disappointment ensued when the list of new additions to the index was announced on September 4th, in time for the index’s quarterly readjustment on September 18.

S&P 500, Tesla,

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