$10,000 in Tesla When It Joined the S&P 500 Would Be About $15,700 Today. An Index Fund Would Have Done Better.
Key PointsTesla closed at a record $695 on Dec. 18, 2020, and joined the S&P 500 at its full weight before the market opened the next trading day.
When Tesla joined the S&P 500 in December 2020, investors who bought $10,000 worth of its stock at its $695 closing price could have seen their investment grow to around $15,700 today. An S&P 500 index fund would have outperformed the stock by a similar margin, with a $10,000 investment growing to about $20,500 before dividends.
This is due to Tesla's initial high price-to-earnings ratio, reflecting the company's rapid growth, which later compressed to more than 330 times earnings. While Tesla has delivered impressive revenue and profit growth, its stock price has not kept pace, as much of that growth was already priced in at the time of its S&P 500 inclusion.
The company's future growth, particularly in its autonomy business and robotaxi services, may offer potential upside, but buying shares at today's price would not likely outperform an S&P 500 index fund.
Written by urgent.news from Yahoo Finance's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
