Tesla finally included in the S&P 500
The Tesla shares has managed to jump in the S & P 500, which the securities allowed to rise again. The worth rose in the US in double digits. Inclusion in the index may also be seen as recognition of the last sustainable profits and successes at Tesla. The inclusion in the S&P 500 had been expected for some time.
The Most valuable car maker in the world
The index operator S&P Dow Jones Indices announced on Monday that Tesla would be included in the S&P 500. The index change will be official shortly before Christmas. With stocks soaring this year, inclusion in the S&P 500 was not a surprise in the end. The market price has now risen to almost 387 billion dollars, and after the announcement of the inclusion in the index even to over 400 dollars. This makes Tesla the most valuable car maker in the world. General Motors, Ford and Fiat Chrysler combined have a combined market price of only $ 125 billion.
Three months ago, there was speculation about an admission to the S&P 500. At that time, Tesla achieved the foremost important requirement for inclusion in the index with four quarterly profits in a row. In October, Tesla was able to present strong business figures again. Quarterly earnings rose to a record $ 331 million. Tesla closed five quarters in a row with profits and therefore the company probably finally laid the foundation stone for inclusion in the index.
Important success for Tesla
Tesla has now reached another important milestone. For many funds, the S&P 500 is a crucial guide for the entire American stock exchange. The index comprises the five hundred largest listed companies in the US and is even better at tracking the broad market than the Dow Jones. Additionally, unlike the Dow Jones, the S&P 500 is weighted consistent with market capitalisation. Companies with a higher market price therefore also have a bigger share in the index.
However, so as to be included in the index, companies must meet numerous qualitative requirements. Profitability is particularly important. Additionally, to a profit in the last quarter, the businesses have to show black numbers in the last four quarters. At Tesla, the analysts were over satisfied with the presentation of the last quarterly figures. The times when Tesla didn’t get out of the red and made losses despite its technical progress seem to be over for good. Tesla is now operating economically, can control its costs and finance capital expenditures with cash flow.
Tesla continues to have good prospects
Even if plenty of things at Tesla now seem “normal”, Elon Musk and his company never run out of innovative ideas. Electric trucks and an insurance offer are currently being talked about in the corporate environment. In addition, Tesla plans to start out mining the important raw material lithium, which is required for batteries, itself.
In the meantime, Tesla’s success isn’t any longer based only on a loyal fan base, innovations and visions, but also on successful business figures. The corporate asserts itself with good products in a fast-growing market. The company therefore also has long-term prospects.
Incidentally, it’s quite symbolic that an oil company will have to leave the S&P 500 in return. This might be Apache, National Oilwell or Devon Energy, but the final decision has not yet been announced. However, the lower market capitalisation suggests that one amongst these companies has to make room for Tesla. But it’s also conceivable that with Xerox a technology company will have to give way to Tesla. A couple of years ago, Xerox was itself one of the most valuable companies in the world, but those days are over.
Tesla shares continue to rise
Despite the hurdles related to being included in the S&P 500, Tesla stock started a new price rally. After the trading hours, the share rose by 14 percent and on the following day on the New York Stock Exchange rose another 14 percent. This increased the market capitalisation to over 400 billion dollars. Since Monday evening, the stock exchange value has risen again by about 100 billion dollars. The corporate is thus expanding its lead as the largest car manufacturer in the world.
Throughout the year, Tesla shares posted an unprecedented increase, no matter the turbulence surrounding the Corona crisis. During the year, the worth of the share quintupled. Additionally, there was a share split at the end of August, which made the share appear optically cheaper. This could make the share more attractive again for small investors. Additionally, many investors, including day traders on new platforms such as Robinhood, increasingly traded the stock and commented on this on social networks.
S&P 500 continues to change
Tesla’s inclusion in the S&P 500 also shows how the index has changed in recent years. The five largest members Apple, Microsoft, Amazon, Alphabet and Facebook currently make up 25 percent of the whole index and occupy the highest places in the index. An analysis by Goldman Sachs came to the conclusion that the index is structured more and more technology-oriented. Technology companies particularly have been added to the index since 2017. This trend will probably intensify again due to the corona crisis. The rise in Tesla’s share price can now continue. This could even be driven by the fact that funds and ETFs on the S&P 500 now inevitably have to buy Tesla shares. Share purchases worth $ 50 billion are conceivable here.
Stock could reach all-time highs again
It wasn’t until September 1 that the stock rose to a new all-time high of $ 502.49, then again consolidated. After the great news from the S&P Dow Jones Indices at the start of the week, the stock climbed back to over $ 440. The resistance at $ 465.902 at the point of the October high couldn’t be broken. However, if the share manages to overcome this resistance in the next few days, the all-time high from September could quickly come into view again. After that, another strong upward movement is also conceivable.
Tesla shares very popular with easyMarkets
The Tesla share is one among the most popular investments at easyMarkets. However, the automaker’s share is now quite expensive. However, investors at easyMarkets have an advantage here: With a minimum investment of 100 dollars, they can also buy fractions of a share and thus participate in expensive values. When buying shares directly on easyMarkets, there are unlevered buy positions. If traders want to trade stocks with levers, this is possible via CFDs.
Canadian Investors also receive dividends
When buying shares directly, traders also receive dividends that are paid on to the trading account. However, traders don’t receive voting rights or a share issue certificate when buying shares via easyMarkets. Additionally, to stocks, traders at easyMarkets also can trade CFDs on other underlying assets or cryptocurrencies. The broker tries to offer beginners access to the international financial markets.
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Conclusion: Recognition for Tesla through inclusion in the S&P 500
Tesla was expected to join the S&P 500 three months ago. Now the time has come. From December 21, the automaker’s shares can be traded in the major US index. The inclusion is also recognition of the company’s development, which has now been profitable for a decent year.
Tesla shares are one of the most popular securities at easyMarkets. One advantage here is that traders with a minimum investment of 100 dollars can also purchase fractions of a share. This not only makes it easier to get started in stock trading, but also to participate in comparatively expensive stocks.