Buying Tesla stock? Here’s what one analyst says ahead of the S&P 500

Tha Tesla Inc. ready to enter the major U.S. allotment leagues on Monday, a relatively normal trend turned upside down by the size of the Silicon Valley electric car maker’s direct market valuation.

Tesla TSLA,
+ 0.49%
it is the largest company added to the S&P 500 SPX index,
Coming Monday, when it starts trading on the benchmark, it appears to be the sixth largest company on the index by market value, currently well above $ 600 billion.

There is a “strong priority” for gains for stocks before and after the introduction of S&P, but a very small precedent for near-term performance after the introduction, analyst Toni Sacconaghi of Bernstein said in recent note.

And as Tesla’s fourth-quarter sales report in early January is not expected to be “an explosion, we would advise investors to bring in short-term profits by December 21,” he said.

The top 50 additions to the S & P500 index since 2010 have been “strongly performed” prior to their inclusion in the S&P, accounting for more than a 3% increase between publication and in- adoption, and “significantly underachievement” in the days and months after their introduction, Sacconaghi said.

On average, new entrants fell 1.7% in the six months after their introduction, he said.

So far, Tesla ‘s appreciation has been more impressive, accounting for more than 230% over the past six months, when expectations were high that the company would enter the list -focused after meeting criteria that included long-term profitability.

So far this year, Tesla shares have gained about 700%, compared to gains of around 14% for the S&P.

S&P Dow Jones Indices announced the introduction of Tesla on November 16, after sculpting the company in an earlier rebalancing. Given the complexity of the company’s addition, he consulted with investors on how they should do it, and eventually decided to add Tesla at the same time. .

Since then, Tesla has seen its shares rise more than 60% and add nearly $ 200 billion in market cap to $ 625 billion today, about 10 times GM General Motors Co., Ltd.
and 18 hour Ford Motor Co. F,

See also: Tesla debt margins close to S&P investment level

Joining the S&P puts Tesla in an infinite number of index funds, going against the many regulatory funds that Tesla had to add to their holdings to balance them.

Most reshuffles are likely to take place after Monday, Sacconaghi said.

In addition to its additions to the S&P 500 index, Tesla received good news about its corporate debt front late Thursday.

S&P Global Ratings improved their rating of Tesla bonds to BB, leaving the company’s credit value measure just two runs away from the prestigious investment rate classification.