New York | Tesla will make its entry into the prestigious S&P 500 index on Monday, which will mark its rise in the stock market, give it access to the most well-rounded financial portfolios and increase the exposure of small carriers to the manufacturer of high-end electric vehicles.
The group led by the whimsical billionaire Elon Musk will indeed be integrated, before the opening of Wall Street, within this index comprising the 500 largest companies listed in the United States, which forces many investment funds to rebalance to take this new situation into account.
With a stock market value of $ 606 billion at the close of New York on Thursday, the manufacturer is the most expensive company to ever join the S&P 500.
Tesla, whose stock has soared more than 680% since the start of the year, is the 9e market capitalization in the world and is gradually approaching Facebook.
The company weighs more than General Motors, Ford, Fiat-Chrysler, Toyota, Honda and Volkswagen combined.
By joining the S&P 500, the Tesla share will systematically appear in listed index funds (exchange-traded funds or ETFs), which passively follow the fluctuations of the index.
This means that these organizations will give the automotive group a place equivalent to its weight in the S&P, currently close to 1%, and, consequently, shed other values.
Small holders, particularly fond of ETFs, will therefore see their exposure to Tesla shares increase, which is already highly sought after by stock market investors.
Funds managed more actively by portfolio managers, whose objective is to be at least as efficient as the major stock market indices, should also give pride of place to Tesla.
These rebalances are all the more complex since the company Tesla will replace, Apartment Investment, weighs only 0.02% of the total value of the S&P 500: the share of all the other companies represented in the funds will therefore decrease. once Tesla is added.
In total, the company S&P Dow Jones Indices, which manages the S&P 500 index, expects capital movements of around 80 billion dollars to prepare the arrival of the group from Palo Alto (California), a record.
The anticipated amounts are so gargantuan that S&P Dow Jones Indices launched at the end of November a consultation with market players to find out whether it was better to integrate Tesla in one go or in two stages. The first option was chosen.
If it represents a stock market consecration, Tesla’s entry into the S&P 500 will not necessarily translate into an immediate surge in the stock, believe several analysts.
“The market is probably gearing up for inclusion in the S&P 500 and this has arguably carried the title enormously in recent weeks and months,” wrote Pierre Ferragu of New Street Research in a recent memo. “After inclusion, investors won’t need to buy that much anymore.”
While Ferragu remains confident in the long-term progress of the action, estimating that it could reach $ 1,200 in 2025 (compared to $ 655.90 currently), he is more cautious in the short term.
JP Morgan’s Ryan Brinkman is being much tougher, deeming the stock overpriced and reiterating long-standing warnings about a speculative bubble surrounding Elon Musk’s group.
“We recommend that investors do not weight Tesla stocks in their portfolio in proportion to its weight in the S&P because, from our perspective and by all traditional metrics, Tesla stocks are not only overvalued, but are overpriced. dramatically, ”asserts Mr. Brinkman.
The tone is not as alarmist on the side of Jefferies: “We do not think that Tesla can dominate the automobile sector given the structure and the policy of this industry”, estimates Philippe Houchois.
“But the multiple challenges Tesla poses to the automotive business model (electric vehicles, batteries, software, range, design and manufacture, and direct sales) provide it with a competitive advantage through a messianic brand whose reach goes far beyond the industry. automobile, ”he adds.