basically article said nothing useful.

bougth more on the dip today.


Ochung230 wrote:
Tesla Stock Is Now Part of the S&P 500 — and the Index Will Never Be the Same
By Al Root
Updated Dec. 21, 2020 2:00 pm ET / Original Dec. 21, 2020 11:02 am ET
Tesla stock is in the S&P 500. The electric-vehicle pioneer goes in as the most valuable company as well as the largest weighting ever added to the index. The addition reshapes the S&P 500 in many ways. And Tesla stock could push the entire index down in coming days.
That’s because for every $11.11, Tesla (ticker: TSLA) stock moves the S&P 500 1 point, according to S&P Global (SPGI). And Tesla stock went up almost $287 dollars between Nov. 16—when the S&P announced Tesla was going in—and Dec. 18.
It was a 70% rise for shares coming into Dec. 21—an incredible jump and almost 26 eleven-elevens.
Tesla stock is down about more than $36, or 5.2%, in early trading Monday. That alone is pushing the index down about 3 points, and overall, the S&P 500 is off about 33 points, or 0.9%.
The reason Tesla stock is down Monday is probably because some index funds have already bought Tesla shares. With the buying done, there is a greater chance of some post-indexation dip might occur. It’s happened in the past when other stocks have been added to the S&P 500—although Tesla stock always seems to defy convention. Shares are, after all, up about 750% over the past year.
Monday’s dip comes down to less buyers than sellers. And investors know some indexation already happened. Tesla stock traded more than 222 million shares on Friday, four to five times its recent daily trading volume. What’s more, the iShares Core S&P 500 ETF (IVV) already lists Tesla stock as a holding at its weighting of almost 1.7%.
The SPDR S&P 500 ETF (SPY), however, doesn’t yet show Tesla as a holding, but it isn’t clear how quickly the holdings are updated. State Street (STT), the company that owns SPDR ETFs, wasn’t immediately available to comment.
Those two ETFs have roughly $600 billion in assets, according to Bloomberg. More than $5 trillion is indexed to the S&P 500.
If Tesla gives back a third of its indexation gains, for example, the move would cost the S&P 500 about 9 points. That’s only 0.2% so investors probably don’t have all that much to fear. One study showed that large companies added give up about 20% of pre-indexation gains. But none of the companies studied are Tesla-sized. What’s more, there aren’t than many observations. That makes taking an average somewhat dubious.
Tesla’s addition remakes the index in a couple of other interesting ways. The auto industry, for instance, suddenly looks like a growth business. Components of the S&P super composite auto and auto parts subindex traded for about 14 times estimated 2021 earnings, on average, before Tesla. Now, with Tesla added in, that grouping trades for about 140 times estimated 2021 earnings when weighted by market capitalization.
Tesla’s market capitalization is more than $600 billion. The other 23 components are worth less than $200 billion. Tesla stock is trading for roughly 180 times estimated 2021 earnings.