"In what is likely—or at least hopefully—the last major market event before the memorable 2020 ends, Tesla will join the S&P 500 next week. The electric-car maker will be the most valuable company to ever be added to the widely followed index, and it will likely land as the eighth-largest stock. This will have a huge impact on the massive amount of assets, both passive and active, tied to the benchmark index. To start with, there is $5.4 trillion in index funds that track the S&P 500, including the $620 billion Vanguard 500 Index fund (ticker: VFINX), and the $322 billion SPDR S&P 500 exchange-traded fund (SPY). When Tesla is added to the index on Dec. 21, these funds will need to purchase tens of millions of shares of the stock—and sell shares of other companies—to rebalance their holdings and reflect the change. As of Tuesday’s close, Tesla stock (TSLA) had a market capitalization of $492 billion based on shares available to trade, which translates to about a 1.5% weight in the S&P 500. That means index funds will be required to buy an estimated $81 billion of Tesla shares, or 17% of the stock’s total free float, and more than three times its average daily volume in November. Not all of this buying will happen immediately—most index funds are able to begin buying ahead of the index change and continue after, so the entire process could take months. If Tesla shares simply drop to where they were at the beginning of 2020—about an 87% collapse—it would pull down the entire S&P 500 by a notable 1.3%, and potentially influence other stocks’ momentum as well. The S&P 500 is nearly the last major index to include Tesla. (Tesla is not among the 30 constituents of the Dow Jones Industrial Index, where it would have an even greater impact.) The electric-car maker reached the S&P’s market-cap requirements years ago but only became eligible in July after reporting its fourth consecutive quarterly profit. Indexes that don’t require companies to be profitable for inclusion, such as the Russell 1000 and Wilshire 5000, have long had Tesla in the mix. The latest event means index investors who want to stay away from Tesla will have one less place to escape." https://www.barrons.com/articles/te...=djem_b_Weekly Barrons feed for last 24 hours
The SP rebalancing will be one at one swoop on Dec 21. (Merry Christmas). TSLA could be up near $800 by then... then we shall see 2021...
I'm more curious about the stocks the indexers will have to sell in order to buy TSLA. When Tesla is added to the index on Dec. 21, these funds will need to purchase tens of millions of shares of the stock—and sell shares of other companies
"If Tesla shares simply drop to where they were at the beginning of 2020—about an 87% collapse—it would pull down the entire S&P 500 by a notable 1.3%,..." So 40 whole points? Oh nos! Sky..falling with little chickens!
for tonight's guess, it would be over 5% but i am out of me office now.. this will take some time but far less time than it took to go up the past month.