Tesla’ stock (TSLA) is reaching a new all-time high on its last day before its S&P500 inclusion, and investors can expect the wild ride to continue with more volatility.
Last month, the S&P announced that Tesla will be included in the next reshuffle of the S&P500 index coming in December.
It sent the stock surging 60% on top of an already massive more than 400% increase in stock price over the last year.
The inclusion is pushing all the index-tracking funds to buy an estimated $80 billion worth of Tesla shares ahead of the inclusion, which is happening Monday.
Today is the last trading day before the inclusion, and the stock is reaching a $684 per share at a valuation of over $630 billion.
It has been a wild ride for shareholders, and some analysts believe that volatility could still be going for a while as the market adapts to Tesla being in the S&P500.
Tesla now has by far the most traded stock by value, and it is going to be affected by the change in ownership.
Credit Suisse reports on the shareholder base amid the S&P inclusion (via Yahoo Finance):
“One reason, Credit Suisse’s Jonathan Golub pointed out, is because only 81% of the company’s market capitalization is actually going to be included in the index, because the S&P 500 is created based on “free float” market cap, which includes only shares available to the public,” he wrote. The remaining 20% of Tesla shares are held by insiders.”
Several analysts are expecting the trading session to get wild for Tesla shareholders on Friday afternoon, as many traders are going to want to get in at the last minute before the S&P inclusion.
By noon, over 44 million TSLA shares, which is worth over $29 billion, had exchanged hands.
That’s close to the average volume for a full day in what has already a very crazy year for the stock.
Well, Tesla has never been a stock for the faint of heart, but this is kind of crazy.
I am actually expecting the stock to calm down after the S&P inclusion with the ownership base stabilizing after large funds tracking the S&P lock in more shares.
There are already a lot of long-term shareholders that are not selling, plus Elon Musk, who owns 20% of the float. It could stabilize the stock, but I am no expert.
Trade at your own risk
Full disclosure: I am long TSLA.
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