Thanks to a profitable second quarter, expectations are high that Tesla stock (NASDAQ: TSLA) will participate in the S&P 500 index. Looking at the current performance of the S&P 500, it seems that the addition of Tesla would actually benefit the index, as the electric car manufacturer has left it in the dust only in previous months.
Tesla’s market cap of about $ 277 billion makes it an important part of Bloomberg’s US Large Cap Index, as B500. The B500 is one of the 500 most capitalized companies in the United States. As noted by Bloomberg, 75 of the companies in the B500 are not in the S&P 500, and probably one of the most notable of these are Tesla, Uber and Blackstone.
In part due to the acquisition of Tesla, the B500 has outperformed the S&P 500 this year. The 75 non-S&P 500 shares in the B500 have so far shown an average gain of 20.8% (17.6% if TSLA is not included). With Tesla larger than 491 members of the S&P 500 and more than 0.8% of the total market cap of the B500, it seems safe to assume that TSLA’s share drove the majority of the performance difference .
Tesla has shown strength this year in its electric car business, with its sales declining by only 5% year-over-year in the second quarter alone, far less than its legacy car opponents. Apart from this, Tesla Energy, which has long been dormant in part due to the company’s focus on its electric car business, has also started picking up, with the Megapack being profitable and Solar Roof installations across the United States States spread.
In addition to these, other aspects of Tesla’s ecosystem have also begun to fetch steam. Unfortunately, it appears that the presence of Tesla Arcade in China shows some potential. Chinese internet giant Tencent recently reported its Q2 2020 revenue, for example, and it emerged that the company’s online gaming segment is showing strength. Unfortunately, part of this power is due to Tencent’s partnership with Tesla.
Tencent’s Peacekeeper Elite, a mobile title, recently launched some Tesla skins for players’ cars, and they prove a v ery successful. In its second-quarter report, Tencent notes that the Tesla skins in the online game were among the ‘very popular’ items in its recent report. Ultimately, the partnership between Tesla and Tencent is a win for both companies, as noted by De Motley Nar.
As of writing, Tesla stock is trading 4.80% at $ 1,629.34.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate positions within 72 hours.
