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Tesla’s S&P 500 Debut May Spark $8 Billion Demand, Goldman Says

Published 11/20/2020, 05:08 AM
Updated 11/20/2020, 05:54 AM
© Reuters.  Tesla’s S&P 500 Debut May Spark $8 Billion Demand, Goldman Says
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(Bloomberg) -- Tesla (NASDAQ:TSLA) Inc.’s already impressive stock market rally might be on the verge of a further massive boost.

The electric carmaker’s scheduled Dec. 21 inclusion in the S&P 500 Index could result in $8 billion of demand from active U.S. large-cap mutual funds, analysts at Goldman Sachs Group Inc (NYSE:GS). 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 Sept. 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% of Tesla’s market value, the analysts said.

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

As Tesla’s market value burgeons, the Palo Alto-based company is also winning over some long-term skeptics. Morgan Stanley (NYSE:MS) analysts this week gave Tesla an overweight rating for the first time in more than three years, predicting that Elon Musk’s firm is on the verge of a “profound model shift” from selling cars to generating high-margin software and services revenue.

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