Famous Electric Car Manufacturer and its Stock

Tesla Motors showroom with multiple luxury Tesla cars inside.

Electric cars step-by-step became an integral part of the modern world. As a result, companies such as Tesla have the opportunity to generate billions of dollars. This trend will continue in the future as more and more people will be able to afford electric cars. Notably, Tesla is one of the most famous electric car manufacturers in the world.

Interestingly, shares of the Palo Alto-based company fell on Tuesday. The S&P 500 Index Committee that decides on new additions to the index, decided not to include the company in the S&P 500. This decision had a negative impact on Tesla.

Nevertheless, as of September 8, the stock increased by around 400% in 2020. For example, this company from California is now worth more than some of the famous automakers such as Toyota and Volkswagen.

Electric car manufacturer and main challenges

As stated above, a famous company was not included, so let’s have a look at the companies that became part of the S&P 500.

The S&P 500 Index Committee added e-commerce site Etsy and automatic test equipment maker Teradyne to the S&P 500. Moreover, the committee also added the pharmaceutical firm Catalent.

Tesla reported its fourth consecutive quarter of profitability in July. However, the committee did not include the California-based company in the S&P 500.

As a reminder, the U.S. markets were closed on September 7 because of Labor Day. Tesla stock fell more than 7% after hours on Friday.

Interestingly, Tesla’s move lower on September 8 also follows a major reversal in the big technology stocks last week. This was a result of fears that valuations reached unsustainable levels.

SoftBank was reportedly the mystery “Nasdaq Whale” that bought billions of dollars in call options in Tesla, Microsoft, Netflix, as well as Amazon potentially driving up valuations.

Tesla split its stock 5-to-1 at the end of the last month. Consequently, its value saw significant increase in the run-up despite having no fundamental impact on the stock. Nevertheless, the stock fell in a couple of days, after its largest outside shareholder Baillie Gifford reduced its stake in Tesla.

Despite all challenges, it makes sense to invest in one of the most famous electric automakers.

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