Factbox: Wall Street braces for Tesla's S&P 500 debut

  • 12/18/2020
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(Reuters) - Tesla will be the most valuable company ever to join the S&P 500 when it makes its debut in Wall Street’s most followed benchmark starting on Monday. Below are some key facts about Tesla and its upcoming entry into the index: ** Index funds tracking the S&P 500 will have to buy over $80 billion worth of Tesla shares by Friday’s close, while simultaneously selling other S&P 500 constituents’ shares worth the same amount, according to S&P Dow Jones Indices. ** At over $600 billion, Tesla is Wall Street’s sixth largest company by market capitalization. However, its weight within the S&P 500 will be slightly diminished because about a fifth of Tesla’s shares are closely held by CEO Elon Musk and other insiders, and the S&P 500 is weighted based on the amount of its constituents’ shares that trade on the stock market. ** Tesla’s stock has surged almost 700% year to date, making it the most valuable auto company in the world, despite production that is a fraction of rivals including Toyota Motor, Volkswagen and General Motors. ** Tesla is easily the most traded stock on Wall Street, with $18 billion worth of its shares exchanged on average in each session over the past 12 months, beating Apple, in second place with average daily trades of $14 billion, according to Refinitiv. ** After a blowout second-quarter report cleared a major hurdle for Tesla’s entry into the S&P 500, analysts now expect the company to end 2020 with net income of $1.1 billion. By comparison, analysts on average expect General Motors to report $6.0 billion in annual net income. ** Bulls view Musk as a visionary entrepreneur central to Tesla’s future. Bears focus on Musk’s track record of missed production targets and on corporate governance risk after Musk was forced to step down as chairman to settle fraud charges in 2018. ** The stock is now trading at over 170 times the average analyst estimate for Tesla’s adjusted net income over the next 12 months, among the highest valuations on Wall Street. ** 35 analysts cover Tesla, on average rating it “hold”. Their median price target is $424.50, which is 35% below Tesla’s price of $655.90 on Thursday.

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