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S&P Dow Jones Indices will admit the car manufacturer Tesla into the S&P 500 Index as of December 21. The news was long-awaited by the company founded by Elon Musk, which is celebrating today on the stock exchange, with a rise of around 11% to around $448 in the opening session.
But what do market analysts think about it?
According to eToro’s market analyst, Adam Vettese, admission to Wall Street’s main list is “the icing on the cake” for Tesla, who has gone through an otherwise difficult 2020 grinding new successes.
This year, Vettese wrote in a note, “Tesla has not only surpassed sales forecasts, but has also become the world’s most valuable car maker. This, at least, if one only looks at the market capitalization that surpassed Toyota’s last July.
For the company founded by Musk, it’s not just a question of image: “the listing in the S&P 500 index scheduled for December will see Tesla access important additional funding,” added Vettese, “as its shares will be added to the passive investment funds that contain trillions of assets.
In short, it is possible that Tesla’s entry into the main price list will project new historical highs: “Currently the value of Tesla’s shares is about 12% lower than its historical high,” the analyst recalled, “but it seems likely that entry into the S&P500 will give new momentum, allowing the value of the stock to set new records even before the end of the year.
In 2020 Tesla already recorded a performance of 450%, with a capitalization that eclipses car manufacturers who, to date, record much higher sales and profits. In 2019, the company recorded $862 million in losses. However, Tesla recorded its fifth consecutive quarterly profit in the third quarter of 2020.
Many analysts remain convinced that a capitalisation of $427 billion is excessive for the carmaker, a dispute that does not appear to be over for the time being.
According to Erik Gordon, a professor at the University of Michigan business school, “the jump in prices will not have pleased pension funds and other individual investors who decided to invest their money in funds indexed to the S&P 500, and who will now see part of their investment redirected to buying Tesla shares at a controversially high price.