Tesla Inc. As the U.S. prepares to join the major leagues of equities on Monday, the relatively regular move became unprecedented by the sharp size of the Silicon Valley electric-car manufacturer’s market valuation.
Tesla TSLA,
The S&P 500 Index is by far the largest company to add to the SPX,
Come Monday, when it starts trading on the benchmark, it will be the sixth largest company on the index by market value, currently above $ 600 billion.
The stock has a “strong precedent for profit” before and after the announcement of S&P, but with very limited precedents for near-term performance after inclusion, said Tony Sankungghi, an analyst at Banstein, in a recent note.
“Investors would recommend a short-term profit on December 21,” he said, noting that Tesla’s fourth-quarter sales report was not expected in early January.
S. P. P. The index, the largest since 2010, had an average “strong performance” before incorporating its declaration into S&P, smoothing out the extra out% between advertising and inclusion, and showing “moderate incompleteness” in the days and months after inclusion, Sacconagi said. .
He added that new entrants were down 1.7% in the six months following inclusion.
So far, Tesla’s appreciation has been more spectacular, with more than 230% in the last six months, while it is expected that higher companies will join the index after the criteria to include long-term profitability.
So far this year, Tesla’s shares have risen about 700%, compared to a gain of about 14% for S&P.
The S&P Dow Jones index announced Tesla’s inclusion on November 16 after the company sank into its previous balance sheet. Realizing the complexity of adding the company, he consulted with investors on how to proceed about it, eventually deciding to add Tesla at once.
Since then, Tesla has seen its shares rise more than 60% and add about 200 200 billion to the market cap, which is 6 625 billion today, 10 times more than General Motors Co.’s GM.
And 18 times Ford Motor Co. F,
See also: Tesla’s debt edge is close to the investment-grade rating on S&P
Joining S&P puts Tesla in a number of index-tracking funds, many systematic fundraisers, which Tesla has had to add to their holdings to balance.
Most of the repositioning will probably take place after Monday, said Sac Kangghi.
In addition to the imminent addition to the S&P 500 index, Tesla received good news late Thursday night on its corporate debt front.
S&P Global Ratings upgraded its rating on Tesla bonds to BB, keeping the company’s creditworthiness move just two runs away from the greedy investment-grade classification.
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