Thread: TSLA - Tesla

Tesla lottery tickets will be higher after announced it will be in the S&P 500.

Not good for index funds though as they'll be forced to chase an overpriced asset even higher. This does not bode well for long term index returns.

Originally Posted by Bullitt

This does not bode well for long term index returns.

Maybe not, but it's only going to be something like 2% of the S&P 500 at most.

It's the idea that it drives up the whole index to inflated levels.

“They’re almost turning the S&P 500 into more of a momentum index,” said Benjamin Lau, chief investment officer of Apriem Advisors, which manages about $850 million and holds a small amount of Tesla shares.

“I’m more worried about how it affects our index funds and passive holdings than anything else,” he said, adding that they could now become more volatile.

https://www.wsj.com/articles/what-te...rs-11605631435

Memories of Yahoo! which also had a P/E ratio of over 1,000 when it was added in 1999.

Tesla’s addition to the index is expected to be particularly challenging because the company will be the largest to ever join, and it is expected to make up at least 1% of the gauge. At its current value, it would be the sixth-largest company in the S&P 500, just bigger than Berkshire Hathaway Inc. and smaller than Facebook Inc.

“The people who will pay the price if S&P screws up are the investors in passive S&P” funds, said Ben Inker, head of asset allocation at investment manager GMO, which oversees about $60 billion in assets.

Timing is hard for investors and indexers alike. Yahoo’s market capitalization peaked less than a month after it was added to the S&P 500 in December 1999—just before the burst of the dot-com bubble. Qwest Communications’ market cap peaked the same day it was added to the index in July 2000. Neither stock trades today.

“Why am I the sucker who has to buy it after the stock is up fivefold?” is what one might wonder if forced to buy Tesla shares after such a tremendous run-up, said Mike Bailey, director of research at FBB Capital Partners, which oversees some Tesla shares.

https://www.wsj.com/articles/teslas-...on-11606645801

A move to the psychological $600's before year end is certainly in the cards though.

Tesla to raise up to $5 billion in share offering, its second in three months

https://www.cnbc.com/2020/12/08/tesl...-offering.html

They should just sell $5T of it. Eventually the earnings will have to catch up to the price, and that's not happening any time soon.

Current PE = 1,200

According to analysis by S3 Partners, short investors in Tesla— those who placed bets in the market that its shares would lose value — have lost $35 billion on those positions so far this year.

Michael Burry, who became famous as the focus of the book “The Big Short” thanks to his bet against the housing bubble and mortgage-backed securities just ahead of the Great Recession, disclosed in a since deleted tweet that he had taken a short position in Tesla as well.

https://sanfrancisco.cbslocal.com/20...line-industry/

JP Morgan just raised their Tesla price target up $10 to $90.

It is respectable that they are taking such a contrarian view of this most beloved company.

Originally Posted by Bullitt

JP Morgan just raised their Tesla price target up $10 to $90.

It is respectable that they are taking such a contrarian view of this most beloved company.

That is strange. Why even bother if their assessment is still almost exactly the same?

Probably have to update clients on a recurring basis.

Cramer

I think Tesla is biding it's time. A lot of investors got involved in the stock market because of Tesla and it made people feel invulnerable. Tesla is kind of like the treasury 10 year benchmark. It has to keep going higher.

https://www.thestreet.com/video/jim-...ck-biding-time