{"id":2205,"date":"2020-11-23T10:23:57","date_gmt":"2020-11-23T15:23:57","guid":{"rendered":"http:\/\/blogs.shu.edu\/stillmanexchange\/?p=2205"},"modified":"2021-02-06T14:07:19","modified_gmt":"2021-02-06T19:07:19","slug":"tesla-joins-the-sp-500","status":"publish","type":"post","link":"https:\/\/blogs.shu.edu\/stillmanexchange\/2020\/11\/23\/tesla-joins-the-sp-500\/","title":{"rendered":"Tesla Joins the S&P 500"},"content":{"rendered":"
\"\"
After five quarters of profitability and an excellent 2020, Tesla is slated to join the S&P 500 in December (Photo courtesy of Dylan Calluy)<\/em><\/figcaption><\/figure>\n

Ryan Visnovec<\/strong>
\nMoney and Investing Editor<\/strong><\/em><\/p>\n

After five quarters of consecutive profit, Tesla has reached the holy grail of inclusion with the S&P 500<\/a>. Upon its immediate inclusion on December 21, Tesla will be the ninth-largest component of the index. While one company will be added to the index, one undisclosed company will be replaced.<\/p>\n

After the announcement, Tesla shares skyrocketed, closing 8.2% higher. Analysts believe that shares will continue to rise in the short term as more attention and momentum is added to the stock. Additions to the S&P 500 tend to do well in the short term but lag in their second year as more attention is placed on profit growth.<\/p>\n

Tesla\u2019s inclusion in the index represents a unique challenge to large asset managers. Funds that track the index will be forced to sell billions of dollars of other shares to make room for the electric vehicle manufacturer.<\/p>\n

Of the myriad of worries large investors have about Tesla\u2019s inclusion, one large concern is the company\u2019s reliance on regulatory credits. In Q3, Tesla saw a net income of $331 million while their sale of regulatory credits contributed $397 million to their bottom line, according to their 10-Q.<\/a><\/p>\n

The concentration of the largest tech companies continues to drive up the index and is raising concerns among asset managers that the S&P is turning from a market index to a tech-heavy momentum index of the 10 biggest companies.<\/p>\n

Investors who cannot afford large positions but still want to diversify buy an S&P 500 Exchange-Traded Fund (ETF). An ETF allows investors to track an entire fund without having to worry about 505 individual companies.<\/p>\n

As college students, we typically tend to fall in the category of ETF holders due to our lack of capital. With the addition of Tesla, we would be exposed to a lot more risk. Tesla\u2019s high market cap and a beta of 2 will make the S&P more volatile going forward.<\/p>\n

 <\/p>\n

Contact Ryan at ryan.visnovec@student.shu.edu<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

After five quarters of consecutive profit, Tesla has reached the holy grail of inclusion with the S&P 500. Upon its immediate inclusion on December 21, Tesla will be the ninth-largest component of the index. While one company will be added to the index, one undisclosed company will be replaced.<\/p>\n","protected":false},"author":4870,"featured_media":2206,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[5,2],"tags":[518,517,135,433,514,516,128],"class_list":["post-2205","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-trending","tag-etf","tag-hedge-funds","tag-investing","tag-november-2020","tag-sp-500","tag-tech","tag-tesla"],"_links":{"self":[{"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/posts\/2205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/users\/4870"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/comments?post=2205"}],"version-history":[{"count":2,"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/posts\/2205\/revisions"}],"predecessor-version":[{"id":2263,"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/posts\/2205\/revisions\/2263"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/media\/2206"}],"wp:attachment":[{"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/media?parent=2205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/categories?post=2205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.shu.edu\/stillmanexchange\/wp-json\/wp\/v2\/tags?post=2205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}