Tesla’s in the S&P 500: Now defense shifts to offense

Tesla represents about 1% of the S&P 500

Christmas came early for Tesla shareholders.

It is now officially a member of the S&P 500 in what is the largest addition to the index ever, with trading kicking off Monday.

With that milestone in the books, a new chapter begins for Elon Musk’s electric vehicle maker, one that may silence his critics once and for all.

TickerSecurityLastChangeChange %
TSLATESLA, INC.563.00-34.95-5.84%

“With continued execution on the global EV story, we believe Tesla has a golden opportunity to capitalize on this transformational EV market opportunity for the next decade with China front and center,” wrote Dan Ives, analyst at Wedbush Securities.

Ives currently rates the stock a hold, yet his most optimistic view sees the shares rising to the $1,000 level. That’s a current increase of about 44% from Friday’s record closing price of $695 per share.

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The stock, which began 2020 around the $86-per-share level, has seen its market cap soar to $658 billion, putting year-to-date returns at 730%. The bulk of those gains, nearly $272 billion in market value, came after the Nov. 16 news of the S&P inclusion plan.

Tesla YTD +730%

In addition, Tesla’s debt was upgraded last week by S&P Global to BB from BB- with the firm also issuing a positive outlook on the company.

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“Tesla Inc. completed the sale of $5 billion of common stock; the company also had raised about $7.3 billion cash through previous share sales this year. As a result, mounting liquidity has substantially reduced its financial risk,” the firm noted, adding, “In addition, the company continues to improve operating execution, become more efficient in production, and make strides in its global expansion."

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S&P says it may raise its view on the company in the next 12 months.

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TMTOYOTA MOTOR148.23-0.29-0.20%

However, Tesla will likely face intense competition from rivals such as Volkswagen, Toyota and maybe Daimler and BMW. Global automakers, notes S&P Global, are expected to launch as many as 25 new EV models in the second half of 2021.