Tesla is 'profoundly overvalued' and its exclusion from the S&P 500 was a 'brave' decision made by the index committee, DataTrek says
exclusion from the S&P 500 index on Friday was a surprise to many given that the mega-cap electric vehicle manufacturer ticked off all the eligibility inclusion requirements. Tesla fell 21% from Friday's close on Tuesday as investors digested the S&P 500 exclusion amid a tech-heavy market sell-off.
But the decision of S&P Dow Jones Indices' index committee to exclude Tesla from the index despite it being eligible for inclusion was a "brave" decision, DataTrek co-founder Nicholas Colas said in a note on Wednesday. The decision by the committee could "only have come from a collective and committed view that Tesla is profoundly overvalued," Colas said.US Investing Championship contender Oliver Kell raked in a 359.4% return through July. Here's the strategy he's using to crush the competition - and 3 stocks he's holding right now. Tesla traded at a trailing 12-month price-earnings multiple of 913x on Wednesday, according to data from YCharts.com. Meanwhile, the S&P 500 traded at a trailing 12-month price-earnings multiple of 21.7x, according to JPMorgan. In addition to its steep valuation, the committee likely believes that Tesla "sits on shakier fundamentals" than its August 31 market capitalization of $465.2 billion may indicate, DataTrek said. Those shaky fundamentals may refer to the fact that much of the profit Tesla has recorded over the past few quarters has derived from the sale of green EV regulatory credits to other car makers that don't meet the mandated annual EV production quota, and not from Tesla's main business: building and selling cars and solar panels. Tesla will remain eligible for inclusion in the S&P 500 index if it continues to stay profitable in future quarters.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Tesla stock tanks after the automaker's surprise exclusion from the S&P 500 - Business InsiderBusiness Insider is a fast-growing business site with deep financial, media, tech, and other industry verticals. Launched in 2007, the site is now the largest business news site on the web.
Read more »
Inside the secret club that helps determine which healthcare startups blow up - Business InsiderBusiness Insider is a fast-growing business site with deep financial, media, tech, and other industry verticals. Launched in 2007, the site is now the largest business news site on the web.
Read more »
Tesla shares crater 15% in premarket trade after S&P 500 snubThe S&P 500 Index Committee added Etsy, Teradyne and Catalent to the index, but stopped short of including Tesla.
Read more »
S&P 500 adds three companies not named Tesla — ‘a bit of a shocker,’ analyst saysThe S&P 500 will add three new companies this month -- but none of them are $TSLA. “The Champagne was on ice to get into the S&P 500 ... This was a bit of a shocker.'
Read more »
The Nasdaq-100 Index is down 9% this month — Tesla leads this list of big tech stock declinesThe Nasdaq-100's biggest losers this month: - Tesla $TSLA - Moderna $MRNA - KLA Corp. $KLAC
Read more »