Connect with us

Business

It's Official: Like It or Not, Millions Will Own Tesla Stock Soon – Motley Fool

Published

 on


A lot of people have strong feelings about electric vehicle pioneer Tesla (NASDAQ:TSLA), both as a company and as an investment. The Elon Musk-led company has generated plenty of controversy over its history, but its skyrocketing share price has left its automaker peers in the dust.

The stock’s amazing run has delivered 550% returns in just the past year, and over 9,500% gains in Tesla’s roughly 10 years as a publicly traded company. That has resulted in a share price that many investors think is far too high to pay.

Yet even if you believe that Tesla isn’t a buy right now, you might still end up acquiring some of its stock soon. That’s because the company that manages one of the most-followed stock indexes in the world just decided to add Tesla to it.

Tesla Semi truck on a road in a picturesque landscape.

Image source: Tesla.

Tesla is joining the S&P 500

S&P Dow Jones Indices is the entity behind the S&P 500 Index (SNPINDEX:^GSPC). The popular benchmark contains roughly 500 of the largest and most influential U.S. companies, but its membership is not static. S&P Dow Jones often adds new components and removes old ones to reflect changing factors like market capitalization, takeover activity, and other corporate events.

For a long time, Tesla wasn’t eligible to be in the S&P 500 despite its large market cap. Many of the formal requirements for inclusion, such as a minimum share price and adequate share float, weren’t a problem for the electric automaker. The requirement that it took the longest for Tesla to meet was that it had to be profitable for four consecutive quarters and over a 12-month period.

Yet even when that happened earlier in 2020, S&P Dow Jones didn’t immediately pull the trigger. Some pundits cited issues with the quality of Tesla’s profits, boosted as they are by regulatory credits. Others pointed to the complexity of adding a company to the S&P 500 that was already as large as Tesla was.

S&P Dow Jones ended the speculation on Monday when it said it would add Tesla to the S&P 500 effective Dec. 21.

A couple of unusual things about Tesla’s addition to the S&P 500

However, the announcement wasn’t typical in a couple of respects. First, S&P Dow Jones didn’t announce which company Tesla will replace. It’s putting that decision off until we’re closer to the late-December rebalance date.

Also, S&P Dow Jones reached out to the investment community for guidance on precisely how to add Tesla. Given the company’s size — its market cap is above $420 billion — this move has the potential to cause a massive disruption to index-related trading. The index manager suggested the possibility of adding Tesla incrementally, possibly incorporating two separate dates on which portions of the final allocation would get put in the S&P 500.

You would’ve been better off buying earlier

The irony here is that index-fund investors who scoffed at buying Tesla earlier in 2020 are going to end up paying much higher prices for the shares. At the beginning of the year, you could’ve bought Tesla shares at a split-adjusted price of less than $100. As recently as June, Tesla stock was trading under $200 per share. But on Monday, Tesla closed above $400 per share — and it jumped more than $50 per share on the S&P 500 news.

However, index funds have no choice. If they want to track the S&P 500, they will need to own Tesla shares — regardless of the premium they’ll be paying to acquire them.

It’s not the end of the world

This isn’t the first time investors have had to accept index-fund additions they didn’t like. It happened with Facebook (NASDAQ:FB), but in hindsight, index investors have to be pleased with the returns the social media giant has generated for their funds.

Moreover, even at Tesla’s massive current size, its impact on your S&P 500 index fund won’t be all that big. Tesla will likely end up with a weighting of slightly over 1% in most of those funds. That will make it the biggest new addition ever — but it still doesn’t amount to a huge exposure to the automaker’s stock.

Tesla will continue to generate controversy, and it’s highly possible that the S&P addition will be the next event that triggers a massive feeding frenzy for the electric vehicle pioneer’s shares. In the end, though, what will matter is whether Tesla can convert on its amazing potential and expand into a business that justifies its industry-leading valuation.

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Imperial Oil to lay off 200 workers following cost-cutting analysis – CBC.ca

Published

 on


Calgary-based Imperial Oil Ltd. says it will lay off about 200 of its 6,000 employees as part of a cost-cutting initiative.

The company, which has been reluctant to reduce staff during the current and previous industry downturns, also confirms it has reduced the number of contractors it employs by about 450 since the start of the year.

Imperial committed in March to cut spending by $1 billion, including a $500 million reduction in capital spending plus $500 million in lower operating expenses.

Job cuts at other oil and gas companies

The job cuts are part of a trend by Calgary oil and gas companies who have been reporting reduced earnings on lower commodity prices due to demand destruction caused by the COVID-19 pandemic.

Cenovus Energy Inc. and Husky Energy Inc. have announced they will cut as many as one in four jobs, potentially more than 2,000 workers, if their merger announced in October is closed as expected early next year.

Suncor, meanwhile, has announced it will cut as many as 1,930 jobs over 18 months to reduce total staff by 10 to 15 per cent.

“Throughout the past year, the company responded aggressively to the challenging business environment by reducing capital and operating expenditures and adjusting project pacing,” Imperial said in a posting on its website, adding it has reassessed its current and future business plans.

“We recognize any job losses are difficult for individuals and their families who may be affected. Impacted employees will be provided with company support, including outplacement services.”

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Alberta withdraws from testing of national emergency public alert system – CTV Toronto

Published

 on


CALGARY —
The majority of Canadians received an emergency alert Wednesday but the notifications did not appear on mobile devices, radios and televisions in Alberta.

The provincial government elected to opt-out of the testing of the national public alerting system, joining Nunavut as the lone holdouts.

In a statement to CTV News, the press secretary for Alberta’s minister of municipal affairs said the Government of Alberta has confidence in its own notification system.

“As Premier Kenney stated yesterday the province will use the Alberta Emergency Alert system to inform people of the new COVID-19 restrictions,” said Justin Marshall. “We opted out of the national alert test to avoid confusion with Alberta’s coming alert. As I’m sure you can understand, too frequent alerts can have the tendency of diminishing the importance.

“Alberta’s focus during this time is on keeping Albertans safe and informed of the measures in place. Nunavut also opted out of the national test today. We are confident that the alert system works for Alberta.”

According to the Canadian Radio-television and Telecommunications Commission, the testing of the national public alerting system is done “to ensure it operates as intended in the event of a life-threatening situation” and no action is required by alert recipients.

With files from The Canadian Press

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Toronto BBQ restaurant appears set to defy city order and reopen – CTV Toronto

Published

 on


TORONTO —
Police have returned to an Etobicoke barbecue restaurant that was ordered to close indefinitely after openly flouting public health restrictions prohibiting on-site dining.

Dozens of officers showed up at the Queen Elizabeth Blvd. location of Adamson Barbecue on Wednesday morning after owner Adam Skelly vowed to reopen in contravention of the Toronto Public Health order.

The enhanced police presence comes one day after dozens of customers were seen eating inside and on picnic benches set up outside the restaurant in direct contravention of the lockdown order that went into place in Toronto at the start of the week.

The brazen flouting of rules eventually led to a decision by Medical Officer of Health Dr. Eileen de Villa to use her powers under the Health Protection and Promotions Act to order the business to close but by the time police showed up to shut it down it was after 4 p.m. and Skelly was already in the process of closing for the day.

In a post on the restaurant’s official Instagram page last night Skelly shared a animated image of him standing on a police cruiser and wielding a spatula along with the caption “Etobicoke. 11 a.m. to sold out. Dine-in.” He then showed up at the restaurant at around 10 a.m., replying “absolutely” when asked by CP24 whether he planned to reopen.

“I think you are going to find there will be people there really quickly to enforce the law (if he does reopen),” Toronto Mayor John Tory told CP24 earlier on Wednesday morning.

“And I would say that if he comes back a second day after being ordered the first day to close he is free to do that but so are the authorities free then to throw the book at him, which is exactly what they should do. It is not my decision but I hope they throw the book at him.”

Adam Skelly

Police and bylaw officer actually showed up at Adamson Barbecue shortly after it opened on Tuesday but did not close it down at the time, telling reporters that it wouldn’t be safe “to go in and physically remove everyone” due to the “sheer number of people” that showed up.

Staff Superintendent Mark Barkley, however, told reporters later in the day that it was a “mistake” not to act earlier in the day.

He said that if customers return to the restaurant today police will be “prepared to deal with people who refuse to leave the premises.”

“If he opens tomorrow we will be here,” he said. “We will have a presence and we will ensure compliance with the order.”

Adamson

Staff Superintendent Mark Barkley, however, told reporters later in the day that it was a “mistake” not to act at the time.

He said that if customers return to the restaurant today police will be “prepared to deal with people who refuse to leave the premises.”

“If he opens tomorrow we will be here,” he said. “We will have a presence and we will ensure compliance with the order.”

‘A bad apple spoiling it for everyone else’

The decision by Skelly to operate in contravention of provincial emergency orders was criticized by a number of officials, including Tory and Premier Doug Ford.

On Wednesday the Vice President of Central Canada for the lobby group Restaurants Canada James Rilett told CP24 that there is a “lot of frustration in the industry right now,” as most restauranteurs believe that they can operate safely.

But he said that what transpired at Adamson Barbecue one day prior was far from safe with little regard paid to even the most basic of precautions, like ensuring physical distancing in lineups and between tables.

“It is a really unfortunate situation. Restaurant have done so much to promote safety and to show that they can serve their customers safely and abide by the rules. Something like this just puts everyone in a bad light and unfortunately it is one of those situations where a bad apple really is spoiling it for everyone else,” he said.

Individuals who violate the province’s emergency orders could face fines of anywhere from $750 to $100,000.

Let’s block ads! (Why?)



Source link

Continue Reading

Trending