Shall TSLA be added to S&P500? (out of main)

[Zaxxon]

So I mis-remembered the shall/should difference

...

I still maintain my point that the 'should' implies obligation

Then I shall suggest that we should get this thread out of the weeds (mods may suggest that we must). And no, there may not be a very high probability that we will--in either the probabilistic or financial lexica.

And since we're down here, I present to you the IETF best practices for requirement levels.

 

[mongo]

Just so we're clear, @Zaxxon I blame you, your 30 minute after the last edit (38 after last post) side-discussion, and your simulated 3-D perspective for getting us kicked out...

 

[mblakele]

If and when TSLA enters the S&P 500, doesn't another company have to be removed? Would it automatically be the one with the lowest market capitalization?

Looking at S&P 500 Companies - S&P 500 Index Components by Market Cap I was surprised to see 505 symbols, because of "several companies with two share classes. For example, Google's parent company Alphabet has Class A (GOOGL) and Class C (GOOG) shares in the index."

With that in mind I'm guessing that NWS would stay, because it's a class B of NWSA and the total market capitalization pulls it off of the bottom. It looks like the next-lowest would COTY?

EDIT: in this case COTY is not "car of the year" — ironic?

 

[mongo]

If and when TSLA enters the S&P 500, doesn't another company have to be removed? Would it automatically be the one with the lowest market capitalization?

Looking at S&P 500 Companies - S&P 500 Index Components by Market Cap I was surprised to see 505 symbols, because of "several companies with two share classes. For example, Google's parent company Alphabet has Class A (GOOGL) and Class C (GOOG) shares in the index."

With that in mind I'm guessing that NWS would stay, because it's a class B of NWSA and the total market capitalization pulls it off of the bottom. It looks like the next-lowest would COTY?

EDIT: in this case COTY is not "car of the year" — ironic?

GE was removed *EDIT from the DOW* in 2018. I don't know that it was replaced yet. And replaced with Walgreen's

 

[mblakele]

GE was removed in 2018. I don't know that it was replaced yet.

Isn't GE still in the S&P 500 — and 100 too? Maybe you're thinking of the Dow, DIJA? I'm not sure why anyone pays attention to that anachronism anymore, but GE left the Dow in June 2018.

Bloomberg - Are you a robot?

General Electric - Wikipedia

 

[mongo]

Isn't GE is still in the S&P 500 — and 100 too? Maybe you're thinking of the Dow, DIJA? I'm not sure why anyone pays attention to that anachronism anymore, but GE left the Dow in June 2018.

Bloomberg - Are you a robot?

General Electric - Wikipedia

Whoops, my bad. Skimmed the Google summaries and gave myself a solid case of confirmation bias.

 

[uselesslogin]

Ok, so it sounds like Q1 will not have enough GAAP income to meet the requirement. We'll have to wait for Q2 to qualify.

 

[Buckminster]

It's here!

Source	Revenue	EPS(GAAP)	EPS(Non GAAP)	Income(GAAP)	Income(Non-GAAP)	CF/ops	FCF	M3 margin
Q3 (actual)	6824,4	1,75	2,90	311,5	516,2	1391,3	881	>20%
FactSet	7120,0	1,26	2,20	~235	?	?	?	?
First Call	7080,6	1,05	2,20	~186	361,4	1020,3	395,3	?
Q4 (guidance)	?	<1,75	<2,90	?	?	?	?	20%
Q4 (actual)	7225,9	0,78	1,93	139,4	345,0	1234,6	910	>20%

Will update as I read the ER!

 

[Buckminster]

Q2'18 had a net loss of -$718m, Q3'18 was +$312m. I have no doubt that Q4+Q1 is going to generate more profit than +$406m.

$139,4m in Q4 leaving ~$266.6m for Q1.

Mean between Q3 and Q3 is ~$428.7. This seems doable. The only issue is Elon's statement on tiny profit...

 

[Cosmacelf]

I don't think there's much doubt that Q4 will be profitable and Q1 will probably be more profitable than Q3.

Q2'18 had a net loss of -$718m, Q3'18 was +$312m. I have no doubt that Q4+Q1 is going to generate more profit than +$406m.

I don't think the S&P committee will depart from their posted rules if Tesla misses the eligibility criteria: Tesla is important to us, but to the S&P committee it's just one company out of thousands - and even in the S&P 500 context it's one company out of 500.

I realize you wrote this before the Q4 conference call. but just to correct the record, there is indeed considerable doubt, now, that Q4+Q1 will exceed $406m. Indeed, per Elon, Q1 will be barely profitable, if at all, mostly due to European and China transit of Model 3.

BTW, IMHO, the only thing that is going to make or break Tesla stock this year is whether or not they start shipping the standard range Model 3 by sometime in Q3. It they do that, they're golden. If they don't, it might get ugly fast (there might not be enough worldwide demand for the expensive Model 3 variants - but there is always the possibility that additional demand for higher priced Model 3 will materialize once people see them in the wild for 6+ months, but that's a risky bet from a stock price view).

 

[elasalle]

I realize you wrote this before the Q4 conference call. but just to correct the record, there is indeed considerable doubt, now, that Q4+Q1 will exceed $406m. Indeed, per Elon, Q1 will be barely profitable, if at all, mostly due to European and China transit of Model 3.

BTW, IMHO, the only thing that is going to make or break Tesla stock this year is whether or not they start shipping the standard range Model 3 by sometime in Q3. It they do that, they're golden. If they don't, it might get ugly fast (there might not be enough worldwide demand for the expensive Model 3 variants - but there is always the possibility that additional demand for higher priced Model 3 will materialize once people see them in the wild for 6+ months, but that's a risky bet from a stock price view).

Provide leasing via third party, keep selling the high end models ... no demand problem
If leasing was an option for Q1, no need to worry about vehicles in transit too, maybe back to S&P next quarter itself (dreamin )

 

[Cosmacelf]

Provide leasing via third party, keep selling the high end models ... no demand problem
If leasing was an option for Q1, no need to worry about vehicles in transit too, maybe back to S&P next quarter itself (dreamin )

Leasing will help, no doubt. Deepak mentioned that currently, about 20% of Model S/X are leased. Presumably, more Model 3 than that would be leased if leasing were available. So that could add an additional 20% to 40%(?) Model 3 US demand. Leasing, of course, makes GAAP worse (if they did it in-house), so that wouldn't help S&P inclusion at all, but it would certainly help the company's long term profitability (thank you GAAP for that nonsensical result).

 

[defc0n]

I’ve been wondering how much Elon/Tesla are deliberately making choices now in an effort to try and reach S&P inclusion. Removal of 75D should introduce temporary demand pulled forward for it this quarter. The layoffs in January may not help contribute much to Q1 numbers though. Consensus now is that Q1 likely won’t have enough profit though for S&P inclusion from what I understand.

 

[Buckminster]

Assuming Q1 ER announces sufficient profit for almost certain S&P inclusion on lets say 2nd May, when will the institutions start buying for their S&P500 ETFs?
Will they buy ahead of an S&P announcement - worried about a squeeze? If they don't, how long do they have before they fail regulation requirements? Presumably they actually have to own the shares. Can they loan the shares back to shorts?

 

[EVNow]

Will they buy ahead of an S&P announcement - worried about a squeeze? If they don't, how long do they have before they fail regulation requirements? Presumably they actually have to own the shares. Can they loan the shares back to shorts?

Not regulation per se - but contractual agreements with S&P.

 

[defc0n]

Assuming Q1 ER announces sufficient profit

Isn’t that pretty unlikely at this point?

 

[Buckminster]

Isn’t that pretty unlikely at this point?

I am always hopeful.... I think I rated it at a 30% chance on another thread.

 

[Buckminster]

How Are S&P 500 Stocks Chosen? -- The Motley Fool

 

[defc0n]

Okay here is another angle to look at: could Tesla dump a bunch of ZEV credits to help make Q1 profitable enough to be S&P eligible? I believe they’ve gone a few quarters now without much in ZEV revenue? I don’t know how much ZEV credit revenue they’d currently be sitting on that they could sell.

At that point the S&P committee could still decide not to include them, though.

 

[neroden]

TSLA will be added to the S&P 500 after Q2 earnings come out; that is to say, August or September. Don't get your hopes up for anything earlier.