Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Following Tesla’s progressive growth, TSLA stock now has all chances of being included in S&P 500. This has become known from a leaked email.
Tesla Inc (NASDAQ: TSLA) has maintained its stock price which opened positive this week with a leaked email from Elon Musk to the company’s employees. The leaked email revealed Elon Musk expressing optimism towards a profitable Q2 pronouncement. TSLA stock has maintained its upward trend today, July 1st after gaining over $48 (4.50%) with expectations of a high closure by the end of the trading day. Already boastful of the market capitalization of over $206 billion, the recent performance of Tesla has shown indications that the electric auto manufacturer may become listed in the S&P 500 if it posts a fourth consecutive profitable quarter as the leaked email suggests.
Is It a Big Deal?
With thousands of companies in the United States, companies seek inclusion into a major stock market index such as the S&P 500. The S&P 500 is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices, and many consider it to be one of the best representations of the U.S. stock market. The average annual total return of the index, including dividends, since inception in 1926 has been 9.8%; however, there were several years where the index declined over 30%. The index has posted annual increases 70% of the time.
The components of the S&P 500 are selected by a committee based on three core criteria including; A market capitalization that is greater than or equal to US$8.2 billion, annual dollar value traded to float-adjusted market capitalization is greater than 1.0, the minimum monthly trading volume of 250,000 shares in each of the six months leading up to the evaluation date and general company profitability spanning at least four consecutive quarters. Considering the conditions listed, TSLA might be a good candidate to be considered for listing by the S&P 500 committee except for the last clause.
What Tesla Must Achieve to Join S&P 500
Tesla currently meets some of the S&P 500 listing requirements such as being based in the United States of America and Having a share price over $1. Tesla, however, lacks the profitability requirement as it has only recorded profitability for the past three quarters. Elon Musk must have known the company’s figures for him to suggest that profitability would be announced, for this to materialize, Tesla must have vehicle sales that exceed the estimated projection of 80,000 to 84,000 vehicle units with hopes on sales from its Shanghai factory.
Despite the rough year caused by COVID-19, TSLA declared a profitable Q1 with a record-breaking 88,400 car unit sales. Should the company get listed on the S&P 500, the company’s stock volatility might get a stable cushion as an investment in the company’s stocks will be through index funds or Exchange Traded Funds ( ETFs). In general, the growth trajectory of TSLA will be a compliment if the stock gets listed on the S&P 500.