Pushing Tesla shares towards $ 600 is here – and beyond

Tesla (Nasdaq: DSLA) One of the biggest stock stories of 2020. With shares gaining nearly 550% since January 1, those who trusted the business model built by CEO Elon Musk have made pretty profitable gains. Kasturi is one of the biggest winners of Tesla stocks and the 3rd richest person in the world, according to Forbes.

In the long run, stock movements reflect the success or failure of a company’s core business. Short-term stock price changes are very difficult to measure. Nevertheless, there is a good reason why Tesla’s stock appears to be $ 600 a share very soon in the future. It could go too high If the conditions are right.

Image source: Tesla.

It is a matter of supply and demand

Tesla has a lot of metrics that investors look at from quarter to quarter. Delivery figures are very important, usually in the first days of each new quarter. Revenue statements also carry considerable weight.

With all of those catalysts behind us in the current quarter, the amount of basic news that will affect Tesla between now and the end of the year will be small. This increases the share price for factors unrelated to Tesla’s business strength.

In particular, between now and the end of the year Tesla could be the biggest driver of shares End of S&P Dow Jones codes to add Tesla To S&P500 Index. The bull case is very simple:

  • Current shareholders know that the index funds that oversee the S&P 500 will buy a significant amount of Tesla shares on or before December 21st.
  • Knowing that all of those purchases are on the horizon, those shareholders have little reason to sell now.
READ  Fantasy Football Week 12 'M & Sid' Start Wide Recipient: Justin Jefferson, DJ Moore Ready to Roll

The amount of money that follows the S&P 500 is incredible. S&P Dow Jones Index reports $ 11.2 trillion in assets using the S&P 500 as a benchmark for revenue comparison purposes. Of that amount, 40% – 6 4.6 trillion – are index assets directly linked to components of the S&P 500.

There has been a lot of buying

Estimates suggest that the S&P 500 will weigh between 1% and 1.5%, based on Tesla’s current market capitalization. Take that amount and use it for $ 4.6 trillion in S&P-tracking assets, and buy $ 69 billion in index funds in late December for the $ 46 billion you have in Tesla shares.

That size was huge, and S&P saw Dow Jones spreading the word about adding Tesla in a couple of days. No final decision has been made on that front, but breaking this move will make it easier for those forced buyers to find preferred sellers.

Getting a short squeeze?

Another thing to keep in mind is that Tesla has already bet many investors against its stake. At the end of October, nearly 48 million shares of Tesla shares – worth more than $ 25 billion at current prices – were sold in a short period of time. This represents the remaining 5% stake.

If index-related buyers end up raising the stock price, the result will be a squeeze on short sellers and lead to a more sharp upward move. Admittedly, after big gains in Tesla shares this year, anyone who sells shares short should be prepared for great risk, so they are less likely to be squeezed than most short sellers. Nevertheless, short-selling investors are ready to lose. It could also open up stocks for a big short-term pump.

READ  Pompeo accuses Chinese Communist Party of sentenced journalist to 4 years in prison for reporting on corona virus

Holidays that are full of complexity are neither fun nor comfortable for Tesla

For many investors, joining Tesla with their index fund holders is the first time they will own a stake in Electricity. Auto Manufacturer Stock.There is no other way for them in this.

However, if you think that justifies Tesla’s basic business Big run-up in its share price This year, you may wish not to wait until you buy index funds. In the short term, a huge rise in stock prices will make all sense in the world.

More from Sigmund Shepard

The CDC says the new Govt strain in the United States could emphasize ‘overburdened’ hospitals

CDC Headquarters in Atlanta Elijah Knowledge | Bloomberg via Getty Images Officials...
Read More

Leave a Reply

Your email address will not be published. Required fields are marked *