4 ms·

Given their net income is positive, what is the probability that they are added to s&p500?

pruthvishetty 6y ago
High.
marc__1 6y ago
High, because of the Criteria to join the S&P500[0]: - a market cap of $8.2 billion - its headquarters in the U.S. - the value of its market capitalization trade annually at least a quarter-million of its shares trade in each of the previous six months - most of its shares in the public’s hands - at least a year since its initial public offering - the sum of the previous four quarters of earnings must be positive as well as the most recent quarter. [0] https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf https://www.spglobal.com/spdji/en/documents/methodologies/me...
- deleted 6y ago
  [deleted]
- jfengel 6y ago
  If they are added to S&P 500, does that mean that a bunch of index tracking funds buying it all at once? I would assume that's already been priced in, if so.
  - knrz 6y ago
    It does, but the rebalancing occurs in September I think.
    - hrpnk 6y ago
      A company can issue new shares for the index funds instead of requiring those to buy the shares on the market. Otherwise, with the low free float, such demand would move the price higher.
      - jcheng 6y ago
        Is there a reason the company would want to do that? Why wouldn't they just let the price move higher?
        mrep 6y ago
        To raise capital and fuel their growth. They raised 2 billion earlier this year at a price of 767 (1650 now) to fuel their growth because they thought there share price was high then. It seems like a perfect time to announce another massive capital raise to fuel their growth now that their share price is double what it was back then and this page [0] lists 1 trillion dollars worth of sp500 index funds and I know vanguard sp500 etf (voo) which isn't in that list has another 250 billion. sp500 is about 27 trillion so that list alone represents about 4.6% of the market. TSLA joining the sp500 means those index funds alone will have to buy about 4.6% of TSLA to rebalance so this to me looks like an amazing opportunity to raise a ton of cash to fuel cybertruck/semi/roadster growth. 4.6% of TSLA 300 billion market cap could fuel a 13.8 billion dollar capital raise which could be announced after sp500 inclusion as a quick way to get those funds to the proper weighting. At least that is my idea. During the call, they said they have 8 billion in cash so they don't need to raise any more capital. But then again, elon also said that right before their 2 billion dollar raise earlier this year so... [0]: https://www.investopedia.com/articles/markets/101415/4-best-sp-500-index-funds.asp https://www.investopedia.com/articles/markets/101415/4-best-...
    - easde 6y ago
      The quarterly rebalancing of the S&P 500 is only relevant when companies already in the index change their free float (usually by issuing / buying back shares). New companies can be added at any time (with a few days advance notice).
  - laluser 6y ago
    Eventually, but it doesn't necessarily need to happen right away.

High.

High, because of the Criteria to join the S&P500[0]: - a market cap of $8.2 billion - its headquarters in the U.S. - the value of its market capitalization trade annually at least a quarter-million of its shares trade in each of the previous six months - most of its shares in the public’s hands - at least a year since its initial public offering - the sum of the previous four quarters of earnings must be positive as well as the most recent quarter. [0] https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf https://www.spglobal.com/spdji/en/documents/methodologies/me...

deleted 6y ago
[deleted]
jfengel 6y ago
If they are added to S&P 500, does that mean that a bunch of index tracking funds buying it all at once? I would assume that's already been priced in, if so.
- knrz 6y ago
  It does, but the rebalancing occurs in September I think.
  - hrpnk 6y ago
    A company can issue new shares for the index funds instead of requiring those to buy the shares on the market. Otherwise, with the low free float, such demand would move the price higher.
    - jcheng 6y ago
      Is there a reason the company would want to do that? Why wouldn't they just let the price move higher?
      - mrep 6y ago
        To raise capital and fuel their growth. They raised 2 billion earlier this year at a price of 767 (1650 now) to fuel their growth because they thought there share price was high then. It seems like a perfect time to announce another massive capital raise to fuel their growth now that their share price is double what it was back then and this page [0] lists 1 trillion dollars worth of sp500 index funds and I know vanguard sp500 etf (voo) which isn't in that list has another 250 billion. sp500 is about 27 trillion so that list alone represents about 4.6% of the market. TSLA joining the sp500 means those index funds alone will have to buy about 4.6% of TSLA to rebalance so this to me looks like an amazing opportunity to raise a ton of cash to fuel cybertruck/semi/roadster growth. 4.6% of TSLA 300 billion market cap could fuel a 13.8 billion dollar capital raise which could be announced after sp500 inclusion as a quick way to get those funds to the proper weighting. At least that is my idea. During the call, they said they have 8 billion in cash so they don't need to raise any more capital. But then again, elon also said that right before their 2 billion dollar raise earlier this year so... [0]: https://www.investopedia.com/articles/markets/101415/4-best-sp-500-index-funds.asp https://www.investopedia.com/articles/markets/101415/4-best-...
  - easde 6y ago
    The quarterly rebalancing of the S&P 500 is only relevant when companies already in the index change their free float (usually by issuing / buying back shares). New companies can be added at any time (with a few days advance notice).
- laluser 6y ago
  Eventually, but it doesn't necessarily need to happen right away.