It appears that Tesla (NASDAQ: TSLA) may receive some consideration from the S&P 500 committee as the electric car maker tries to qualify for the index with its upcoming second-quarter 2020 earnings results. According to a recent report by Bloomberg intelligenceTesla can still be included in the S&P 500 even if it doesn’t post a second-quarter profit.
The report, titled “Inclusion of Tesla in the S&P 500 Index May Require Human Intervention,” describes how the electric car maker could still be considered by the index committee even though the electric car maker could lose a profit from the second trimester. According to Bloomberg intelligenceTesla’s current size and position in large-cap competitive benchmarks could be defining factors that could affect the committee’s decision. The following is the text of the report.
“Tesla’s outsized returns this year are likely driven in part by prospects of its impending inclusion in the S&P 500, though a 2Q loss history could hinder the way. If Tesla repeats that pattern, we expect the index committee to make an exception and add the automaker anyway, given its size and position in large-cap competitive benchmarks, ”the publication wrote.
Yes Bloomberg intelligenceSpeculation proves accurate, Tesla may have a better chance of qualifying for the S&P 500. The second quarter, after all, was a difficult period for Tesla. The company was able to post more than 90,000 vehicle deliveries, exceeding Wall Street expectations, but its operations in the United States were negatively affected by the pandemic.
This is especially remarkable considering that the second quarter has traditionally been a challenge for Tesla, even without a pandemic. That said, it’s hard to deny the fact that Tesla’s Q2 performance still far exceeded its more experienced peers. Tesla’s vehicle deliveries only decreased by less than 5% year-over-year, for example, while GM fell 34%, FCA fell 39%, and even Toyota fell 35%.
The S&P 500 requires companies to report a cumulative profit during their previous four quarters, and their last quarter shows a profit. So far, Tesla has served three of these quarters, thanks to a net profit of $ 143 million in the third quarter of 2019, $ 105 million in the fourth quarter of 2019, and $ 16 million in the first quarter of 2020. Taking this into account Mind you, even a net profit of $ 1 in the second quarter of 2020 would qualify the electric car maker for the S&P 500.
Yes Bloomberg intelligenceThe recent report is an indication, however it appears that the chances of Tesla being included in the index have taken a step forward.
H / T Alex Voigt
Disclosure: I do not own TSLA shares and I have no plans to start any position within 72 hours.
