By Chuck Mikolajczak and Noel Randewich
Investors viewing the company’s quarterly report after the bell will be focused on one question: Was Tesla profitable?
While analysts on average expect a loss, estimates improved after Tesla reported second-quarter vehicle deliveries higher than expected earlier this month, helping to increase the stock by more than 47% in July. Tesla shares rose 2.16% to $ 1,602.24 per share on Wednesday.
Analysts on average expect a loss of $ 240 million for the quarter, compared to an estimated loss of nearly $ 340 million a month ago, according to Refinitiv.
With a market capitalization of approximately $ 295 billion, Tesla would be among the most valuable companies ever added to the S&P 500, over 95% of the index’s existing components. It would have a big impact on investment funds that follow the index.
Tesla in the S&P 500? https://fingfx.thomsonreuters.com/gfx/mkt/dgkpldgxapb/VokA0-tesla-in-the-s-amp-p-500-%20(4).png
A S&P Dow Jones Indices spokeswoman declined to comment on specific changes to the index. Eligible candidates are considered by an index committee that assesses factors including sector balance and size representation. The index committee does not make changes based on a specific schedule.
Mutual funds trying to follow the S&P 500 identically have at least $ 4.4 trillion of assets, according to the S&P D & Jones indices, and those funds would have to buy Tesla shares quickly to avoid mistakes in tracking performance. of the index.
Ivan Cajic, head of index and ETF research at Virtu Financial, estimated that index managers would need to own approximately 25 million Tesla shares, currently worth approximately $ 40 billion.
Furthermore, actively managed mutual funds comparing their performance to the S&P 500 would be forced to decide whether to buy Tesla shares. Such funds manage trillions of dollars in additional assets.
Tesla is among Wall Street’s most loved and hated stocks. It has increased 500% in the past year and is the shortest stock in the US stock market, currently at $ 20 billion, according to S3 Partners.
(Reporting by Noel Randewich and Chuck Mikolajczak; edition by Jonathan Oatis)
