Tesla S&P 500 debut may spark $8 bn demand, say Goldman Sachs analysts

As Tesla’s market value burgeons, the Palo Alto-based firm is also winning over some long-term skeptics

Topics
Tesla | S&P 500 | Goldman Sachs

Tesla’s already impressive stock market rally might be on the verge of a further massive boost.

The electric carmaker’s scheduled December 21 inclusion in the S&P 500 Index could result in $8 billion of demand from active US large-cap mutual funds, analysts at Goldman Sachs Group wrote in a note on Friday.

“Of the 189 large-cap core funds in our universe, 157 funds that manage around $500 billion in assets under management did not hold Tesla on September 30,” the analysts wrote. Assuming those funds chose to hold the carmaker at benchmark weight, they would need to buy $8 billion of the stock, or about 2 per cent of Tesla’s market value, the analysts said.

The shares were 0.5 per cent lower US pre-market trading, but set for a 22 per cent weekly gain after Thursday’s all-time high. Tesla is the best-performing large-cap stock in the US this year, soaring about 500 per cent, as investors show increasing confidence that electric cars, trucks and buses will dominate the future of auto and transportation industries.

As Tesla’s market value burgeons, the Palo Alto-based firm is also winning over some long-term skeptics. Morgan Stanley analysts this week gave Tesla an overweight rating for the first time in more than three years.

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First Published: Sat, November 21 2020. 01:35 IST

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