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Frequent Contributor

When Tesla joins the S&P500....

https://www.bloomberg.com/news/articles/2020-07-31/stock-market-what-happens-if-tesla-enters-s-p-500

When it happens, a lot of index funds will have to buy TSLA stock. Will the stock go up then? This could already be in the price. Nevertheless, when buyers buy, they buy from sellers .... it’s hard to see how a hundred index funds buying Tesla cannot push the price up, if the sellers know that the buyers have to buy. When the S&P makes a decision, it will have to be announced publicly.

I cannot see myself buying TSLA stock, but it’s not clear whether funds with significant holdings should be favored or avoided.

Some owners of TSLA and its share of the Fund:

  • FSPGX (Fido LG index; tracks Russell 1000 Growth index) — 0.895%
  • QQQ (Nasdaq 100) — 2.42%
  • VWUAX (VG US Growth) — 3%
  • FCNTX (Contrafund) — 0.088%
  • VWILX (VG Intl [!] Growth) — 5.1%
  • TRBCX (TRP Blue Chip Growth) — 0%
  • BPTRX (Baron Partners) — 35.96%
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Re: When Tesla joins the S&P500....

The SP500 committee is not obliged to add TSLA, is it?  It can do so, now that it has been profitable for two quarters, but there are other criteria, I'm sure.

There is something seriously amiss when the TSLA share price implies an approximate $750,000 profit on each car sold.

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Frequent Contributor

Re: When Tesla joins the S&P500....

@SJ60 , I think that $750K market-cap per TSLA delivered . 

YBB
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Contributor ○

Re: When Tesla joins the S&P500....

@chang,

As you know already TSLA has been added to many active funds. Also QQQ and many other ETF's.

VTI, VUG, MGK, MGC, VV, VONE etc... have it, and VXF extended market index where it is #1 holding.

Since it is in these index funds already and many others, I am not sure how much impact it will really make. As you say it could already be baked in.

Also, if it gets included in the SP500 index funds it will be eliminated in some of the other index funds such as VXF, going from one to the other.

Fishingrod

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Frequent Contributor

Re: When Tesla joins the S&P500....

Can someone answer the question why TSLA which makes about 500k cars a year is is more highly valued than Toyota which makes 10M cars a year?

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Contributor ○

Re: When Tesla joins the S&P500....

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Frequent Contributor

Re: When Tesla joins the S&P500....

"Can someone answer the question why TSLA which makes about 500k cars a year is is more highly valued than Toyota which makes 10M cars a year?"-----Intruder

 

 The market is forward-looking, not backward. The future in the auto market favors electric vehicles. Who has cornered the high-end EV market? Has Toyota been able to produce a vehicle comparable to Tesla's which was developed nearly a decade ago? Of course not and the market recognizes that.

 The market also has priced in any forecastable possibility that Tesla will be included in the S&P. Those waiting for a permanent and significant bounce solely on inclusion may be disappointed.

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Frequent Contributor

Re: When Tesla joins the S&P500....

That doesn’t answer the question. If TSLA sells 500k cars in 2020 at 50k each the total sales will be $25B while its market cap is 270B.

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Frequent Contributor

Re: When Tesla joins the S&P500....

 Most informed investors have time horizons exceeding a few months. The market is pricing in future expectations!

 

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Frequent Contributor

Re: When Tesla joins the S&P500....

 Ron Barron explains Tesla"s future "expectations" and sees phenomenal growth and value in its stock.

https://www.youtube.com/watch?v=R5QJlTMADGQ

 

 

Ron Baron, chairman and CEO of Baron Capital, joins "Squawk Box" to discuss his thoughts on Tesla, the various wealth tax policies proposed by Democratic pre...
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Contributor ○

Re: When Tesla joins the S&P500....

I was thinking of buying a car before Covid, now deferred to after Covid.

Tesla is at this point my only choice. I am not even considering Audi, Volvo and Mercedes which would have been my top choices before Tesla. My neighbors, middle class folks like me, have two Tesla both bought in last 1-2 years.

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Frequent Contributor

Re: When Tesla joins the S&P500....

How much are you willing to spend for a Tesla?

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Frequent Contributor

Re: When Tesla joins the S&P500....


@waffle wrote:

I was thinking of buying a car before Covid, now deferred to after Covid.

Tesla is at this point my only choice. I am not even considering Audi, Volvo and Mercedes which would have been my top choices before Tesla. My neighbors, middle class folks like me, have two Tesla both bought in last 1-2 years.


Tesla is a great car. Thought about getting one a few years back based on its appearance. After driving it I was not as enthused. Test drive models are programmed to limit performance but acceleration was still impressive. I still prefer the sound of a big V-8 which is quickly disappearing. Good luck with your new purchase.

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Frequent Contributor

Buy at what price?

Tesla topped out at $500 (split adjusted) and is now at $330. Quite a healthy (30%) pullback.

What price are you looking for to buy in? Let’s say a 15-20 year time frame.

@retiredat48  This would be an ideal candidate for a rigorous PU algorithm. Say 20-25 shares at a time, 10 buys in 5% increments? Gets you to around $100k.

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Re: Buy at what price?

@chang,

I would have loved to have bought TSLA in the beginning, but this bird has flown pretty good. I am so skeptical of individual stocks, especially ones that haven't paid a dividend for a long time. 30% down on a stock that just went up almost 1000% is very substantial but still not in the realistic realm for me. But I am not the market.

If I were to buy it and I won't. I wouldn't buy it until it hit at least 250.

I do own TSLA in 3 of my funds, VWILX, VIGAX, and VTMFX.

Fishingrod

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Frequent Contributor

Re: Buy at what price?

@Fishingrod  Yeah I hear you on Tesla’s meteoric rise. Yet ... you have to wonder why your (actively managed) fund managers—no dummies—continue to hold it.

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Explorer ○○○

Re: Buy at what price?


@chang wrote:

@Fishingrod  Yeah I hear you on Tesla’s meteoric rise. Yet ... you have to wonder why your (actively managed) fund managers—no dummies—continue to hold it.


I wonder if their reason would be different than yours or mine---herd mentality, fear of missing out, performance chasing, et al...........denials to the contrary notwithstanding.

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Contributor ○

Re: Buy at what price?

@chang, @ignatz ,

"you have to wonder why your (actively managed) fund managers—no dummies—continue to hold it."

_____________________________________________________________________________________

I agree, but I will let them make that decision not me. It at least makes me "feel safer"

Fishingrod.

 

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Frequent Contributor

Re: Buy at what price?


@chang wrote:

@Fishingrod  Yeah I hear you on Tesla’s meteoric rise. Yet ... you have to wonder why your (actively managed) fund managers—no dummies—continue to hold it.


Because 2020 TR for TSLA Is 295%?

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Frequent Contributor

Re: Buy at what price?


@Intruder wrote:

@chang wrote:

@Fishingrod  Yeah I hear you on Tesla’s meteoric rise. Yet ... you have to wonder why your (actively managed) fund managers—no dummies—continue to hold it.


Because 2020 TR for TSLA Is 295%?


I hope that’s not their reason for holding it!

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