Tesla inc. : Why Tesla fails at the gates of the S&P 500 – BFM Bourse

Tesla inc. Why Tesla fails at the gates of - Tesla inc. : Why Tesla fails at the gates of the S&P 500 - BFM Bourse

(BFM Bourse) – No mention of Tesla in the latest press release from stock index publisher S&P Dow Jones. For entry to the S&P 500, the most used of the American indices, the manufacturer of electric vehicles will have to come back.

Building a stock market index is as much an art as it is a science. Of course, each supplier sets the main principles for constituting the sample of stocks forming each index. But in the end, the committee of experts (anonymous, in order to avoid any pressure) responsible for agreeing on the list of stocks that must appear in an index so that it is sufficiently representative of the market over time retains a significant room for maneuver. Also index revisions often bring their share of surprises. And the one reserved by S&P Dow Jones Indices Friday night was significant: contrary to what many fans had hoped, the most richly valued automaker on the planet, Tesla, was not selected.

S&P Dow Jones Indices, publisher of dozens of indices including – as its name suggests – the S&P 500 and the Dow Jones Industrial Average, announced that Etsy, Teradyne and Catalent stocks will be part of the S&P 500 from September 21. , while H&R Block, Coty and Kohl's would leave the index, the most followed by professional managers.

This change accentuates the weight of technology stocks, notably from the Nasdaq (such as Etsy, a platform dedicated to designer products and Teradyne, a specialist in semiconductor testing, Catalent being from the NYSE), at the expense of companies from the "old economy" such as the Coty cosmetics group, born in Paris at the start of the 20th century, or the Kohl's department store chain.

Fragile benefits

Many players, however, expected to see Tesla join the S&P 500. Of course due to the absolute level of its capitalization: the minimum threshold required is only $ 8.2 billion currently, when the group is currently worth. 380 billion. But above all because the group founded by Elon Musk has just formally recorded four consecutive profit quarters – a condition that escaped it for the moment.

But this may be where the shoe pinches. If each quarter from the third of 2019 to the second of this year has indeed shown a profit, it is only by integrating the profit that Tesla derives from the resale of CO2 emission rights to other manufacturers. However, the group's leaders themselves stress that the resale of carbon credits cannot constitute a source of long-term profits (the competitors themselves multiplying the electric models in their ranges). Should it therefore be considered the validated criterion insofar as the accounts clearly show a profit for four quarters, or else put the accent on the origin of the profits? The committee of S&P Dow Jones has decided for the moment.

Guillaume Bayre – © 2020 BFM Bourse

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