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Tesla (TSLA) S&P 500 debut to usher in $8B demand from US large-cap funds

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Tesla (NASDAQ:TSLA) may have a lot of momentum now, but the electric car maker could very well be on the verge of receiving another massive boost. According to analysts from Goldman Sachs Group Inc. on Friday, Tesla’s inclusion in the S&P 500 next month could result in $8 billion of demand from active US large-cap mutual funds. 

This is due in no small part to the fact that a large number of mutual funds currently do not hold Tesla, at least as of Q3’s end. Goldman Sachs analysts noted that this is true for 157 large-cap funds out of the 189 that are currently active. If these funds decide to hold the EV maker at benchmark weight, the firms would likely end up buying $8 billion worth of TSLA stock. That’s about 2% of the automaker’s market value. 

“Of the 189 large-cap core funds in our universe, 157 funds that manage around $500 billion in assets under management did not hold Tesla on Sept. 30,” the Goldman analysts said

Amidst Tesla’s meteoric rise, the electric car maker has started winning over some longtime skeptics recently. These include Morgan Stanley, which gave Tesla an “Overweight” rating for the first time in over three years. In a note, the Wall Street firm stated that Tesla is on the verge of a “profound model shift” as the company transitions from simply selling electric cars to generating high-margin software and services. The company also holds potential in its energy division, which is now hitting its stride. 

Tesla shares are poised for a 22% weekly gain after hitting all-time highs on Thursday. So far, Tesla is the best-performing large-cap stock in the US this year, with shares rising around 500%, as investors exhibit increasing confidence in the impending shift to sustainable transportation. This is one of the reasons why Tesla will stand among the largest companies in the S&P 500 when it joins the index next month. 

Tesla currently holds a market cap of more than $472 billion as of writing, making it larger than 12 of the auto industry’s biggest companies combined. 

As of writing, Tesla stock is trading at $498.85 per share. 

Disclaimer: I am long TSLA.

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