⏱️ 4 𝘮𝘪𝘯𝘶𝘵𝘦𝘴 𝘵𝘰 𝘳𝘦𝘢𝘥 ⏱️ 𝗧𝗟;𝗗𝗥 read the 𝗯𝗼𝗹𝗱 and add important dates to your calendar!
Last 21st September, we’ve had the crafters marketplace Etsy, industrial automation and robotics Teradyne, and pharmaceutical Catalent, joining S&P 500. All of these together represented a tenth of Tesla’s market cap.
S&P committee shed some light regarding the next addition to the index, 𝗧𝗲𝘀𝗹𝗮, as a $530B+ technology/solar/electric vehicle monster with one of the most beloved CEO of all time, Elon Musk.
𝗔𝗹𝗹 𝗮𝘁 𝗼𝗻𝗰𝗲, 𝗼𝗿 𝘀𝗺𝗮𝗹𝗹𝗲𝗿 𝗰𝗵𝘂𝗻𝗸𝘀?
Given the size of the company, adding it to the index is not an easy deed as the company is already in the top 10 regarding market cap.
As this will shake the entire index, the S&P committee disclosed that there were multiple possible approaches proposed by investors, including separating into two tranches, one in December and the other in March.
The suggestions were discarded, and 𝗧𝗲𝘀𝗹𝗮 𝘄𝗶𝗹𝗹 𝗳𝘂𝗹𝗹𝘆 𝗷𝗼𝗶𝗻, 𝗶𝗻 𝗮 𝗼𝗻𝗲-𝘀𝗵𝗼𝘁, 𝘁𝗵𝗲 𝗦&𝗣𝟱𝟬𝟬 𝗯𝗲𝗳𝗼𝗿𝗲 𝘁𝗵𝗲 𝘀𝘁𝗮𝗿𝘁𝗶𝗻𝗴 𝗼𝗳 𝘁𝗵𝗲 𝘁𝗿𝗮𝗱𝗶𝗻𝗴 𝗱𝗮𝘆 𝟮𝟭𝘀𝘁 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿.
📅 𝗜𝗠𝗣𝗢𝗥𝗧𝗔𝗡𝗧 𝗗𝗔𝗧𝗘 #𝟭 𝟮𝟭𝘀𝘁 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 – 𝗧𝗲𝘀𝗹𝗮 𝗮𝗱𝗱𝗶𝘁𝗶𝗼𝗻
𝗪𝗵𝗮𝘁 𝗮𝗯𝗼𝘂𝘁 𝘁𝗵𝗲 𝗘𝗧𝗙𝘀?
Being added on Monday 21st December means that all funds that mirror or somehow track the index will make their moves in preparation on the Friday before, 18th December.
📅 𝗜𝗠𝗣𝗢𝗥𝗧𝗔𝗡𝗧 𝗗𝗔𝗧𝗘 #𝟮 𝟭𝟴𝘁𝗵 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 – 𝗙𝘂𝗻𝗱𝘀 𝗽𝗿𝗲𝗽𝗮𝗿𝗮𝘁𝗶𝗼𝗻
𝗛𝗼𝘄 𝗯𝗶𝗴 𝗶𝘀 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝗰𝗼𝗺𝗽𝗮𝗿𝗲𝗱 𝘁𝗼 𝗼𝘁𝗵𝗲𝗿 𝗽𝗮𝗿𝘁𝘀 𝗼𝗳 𝗦&𝗣𝟱𝟬𝟬?
As mentioned previously, the company is currently evaluated at around $530B, making it the 6/7th-largest company in the U.S. stock market.
Facebook’s $820B market cap attributes a 2.21% weight, while Berkshire Hathaway INC’s $537B market cap attributes a 1.52% weight, hence we can expect Tesla to fit around these values – 1.5 to 1.6%.
Let take the scenario where 𝗧𝗲𝘀𝗹𝗮 𝘄𝗲𝗶𝗴𝗵𝘁𝘀 𝗮𝘀 𝗺𝘂𝗰𝗵 𝗮𝘀 𝗕𝗲𝗿𝗸𝘀𝗵𝗶𝗿𝗲 𝗛𝗮𝘁𝗵𝗮𝘄𝗮𝘆 𝗜𝗡𝗖, 𝟭.𝟱𝟮%
According to spglobal.com, the 𝗶𝗻𝗱𝗲𝘅 contains $𝟰.𝟲𝗧, therefore, the moment the company joins the index, we can expect
👉 $𝟲𝟵.𝟵𝟮𝗕 𝘁𝗼 𝗯𝗲 𝗮𝗱𝗱𝗲𝗱 𝘁𝗼 𝗧𝗲𝘀𝗹𝗮 𝘁𝗵𝗮𝗻𝗸𝘀 𝘁𝗼 𝘁𝗵𝗲 𝗦&𝗣 𝗮𝗹𝗼𝗻𝗲
Also according to spglobal.com, there is $𝟭𝟭.𝟮𝗧 𝗶𝗻𝗱𝗲𝘅𝗲𝗱 𝗼𝗿 𝗯𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝗲𝗱 to S&P500, therefore, the moment the company joins the index, we can expect
👉 $𝟭𝟳𝟬𝗕 𝘁𝗼 𝗯𝗲 𝗮𝗱𝗱𝗲𝗱 𝘁𝗼 𝗧𝗲𝘀𝗹𝗮 𝗳𝗿𝗼𝗺 𝗦&𝗣 𝗮𝗻𝗱 𝗮𝗹𝗹 𝗘𝗧𝗙’𝘀 𝗺𝗶𝗿𝗿𝗼𝗿𝗶𝗻𝗴 𝗶𝘁
This explains why we tend to see multiple surges regarding the process of a company joining the index – typically with much smaller values.
As money is certain to flow in from index and funds, this tends to attract a lot of day traders searching for quick profits, as such, 𝗲𝘅𝗽𝗲𝗰𝘁 𝗲𝘃𝗲𝗻 𝗵𝗶𝗴𝗵𝗲𝗿 𝘃𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 𝗶𝗻 𝘁𝗵𝗲 𝗻𝗮𝗺𝗲 𝗳𝗼𝗿 𝗮 𝘄𝗵𝗶𝗹𝗲.
I’ve made a video that explains the process of a company joining the S&P and what we can expect, back on 7th September, feel free to check it out!
Tesla does not join S&P500 – Should we hold it? https://youtu.be/bh4c074EkXg
𝗪𝗵𝗮𝘁 𝘄𝗶𝗹𝗹 𝗧𝗲𝘀𝗹𝗮 𝗿𝗲𝗽𝗹𝗮𝗰𝗲?
S&P didn’t yet disclose what stock Tesla will be replacing, only that it will be announced on 11th December
📅 𝗜𝗠𝗣𝗢𝗥𝗧𝗔𝗡𝗧 𝗗𝗔𝗧𝗘 #𝟯 𝟭𝟭𝘁𝗵 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 – 𝗦&𝗣 𝗮𝗻𝗻𝗼𝘂𝗻𝗰𝗶𝗻𝗴 𝘄𝗵𝗼 𝘄𝗶𝗹𝗹 𝗯𝗲 𝗿𝗲𝗽𝗹𝗮𝗰𝗲𝗱
𝗔𝘁𝘁𝗲𝗻𝘁𝗶𝗼𝗻, 𝗼𝗽𝘁𝗶𝗼𝗻𝘀, 𝗮𝗻𝗱 𝗳𝘂𝘁𝘂𝗿𝗲𝘀!
The options market calendar reveals that on the 19th of December we’ll have the once-in-a-quarter day event when options and futures will expire simultaneously, expecting a high volume of trading and boosting liquidity.
Part of this liquidity might flow right to Tesla’s inclusion, so, again, 𝗲𝘅𝗽𝗲𝗰𝘁 𝗲𝘃𝗲𝗻 𝗵𝗶𝗴𝗵𝗲𝗿 𝘃𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆.
📅 𝗜𝗠𝗣𝗢𝗥𝗧𝗔𝗡𝗧 𝗗𝗔𝗧𝗘 #𝟰 𝟭𝟵𝘁𝗵 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 – 𝗼𝗽𝘁𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗳𝘂𝘁𝘂𝗿𝗲𝘀 𝗲𝘅𝗽𝗶𝗿𝗮𝘁𝗶𝗼𝗻
𝗦𝗼… 𝗪𝗵𝗮𝘁 𝘁𝗼 𝗱𝗼?
The EV story keeps getting better, all car manufacturers are racing to update their assembly lines to produce EV’s, and this has been Tesla’s foundation.
Like many others, I’m feeling very confident about Tesla going forward!
Sources WSG, spglobal.com, seeking alpha, investing.com
$TSLA (Tesla Motors, Inc.)