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Fred Dunkley

Fred Dunkley

Writer, Safehaven.com

Fred Dunkley is a tech analyst, writer, and seasoned investor. Fred has years of experience covering global markets and geopolitics. 

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Is Tesla Heading To The S&P 500?

Tesla

EV sales may be experiencing an expected dip in sales this year thanks to pandemic-induced recession, but that’s no matter for quarantined millennial traders who have taken over retail investing and are pushing EV stocks to new heights.

Millions of people, mostly of the Millennial generation, who are pouring into Tesla as one of their favorite ESG stocks for a renewable energy springboard will be anxiously awaiting Tesla’s quarterly earnings, which are due out tomorrow. 

And it will be a huge day of vindication for these novice investors who have shunned the trading legends if Tesla reports another quarterly profit tomorrow, as expected. 

Indeed, while Wall Street is moaning about the ‘Robinhood bubble’ caused by the flood of newbie retail investors who don’t know a thing about fundamentals, another quarterly profit for Tesla will pave the way for its entry into the S&P 500.

Even more to the point, with a market cap of ~$304 billion, Tesla would end up being one of the most valuable companies ever added to the index. 

Tesla was already riding high on Q1 car deliveries that came higher than expectations, and the bulls are expecting more of the same.  Tomorrow marks another milestone in the history of one of the most controversial stocks Wall Street has ever seen. You either love it, or you hate it. You’re either the most bullish bull around, or you're a bear all the way. There’s nothing in between here. 

Millennial investors are loyal to the death--and they are particularly loyal to Elon Musk. With their help, he’s managed to defy the bears time and again never more strongly that this past month. 

Now, they have Robinhood, the zero-fee trading app that has democratized trading, to help them provide a unified front that threatens to dominate the market. And Tesla turns out to be the poster child for millennial “impact investing”. 

Tesla and the EV sector have been on a tear in recent weeks thanks to a wave of speculative bets and the famous “Robinhood effect”. And no amount of bad press seems capable of derailing Millennial sentiment on this one. 

Tesla's stock reached an unprecedented intraday high of $1,760 last week as tens of thousands of new investors poured into the stock via Robinhood. Almost 40,000 Robinhood accounts added Tesla shares during a single four-hour span last Monday, according to Bloomberg.

Related: BMW Signs $2.3 Billion Battery Deal With Swedish Producer

And while Tesla is one of Robinhood’s most popular stocks--another is also an EV manufacturer--Chinese NIO. Together over the past 30 days, these two stocks have gathered the highest number of new retail traders on Robinhood. 

Nikola, the electric truck startup, is also on Robintrack’s top 25 leaderboard, and the EV industry at large is likely to get another boost if Tesla gets added to the S&P 500--just like they have all benefited from the millennial attention to Tesla on Robinhood.  

There’s a lot of talk about these newbie investors creating an EV stock bubble that, when it bursts, will be messy, but this could also just be Wall Street refusing to see the writing on the wall. The market is changing, and this new form of trading democracy has extreme power to drive stocks whether legendary investors agree or not. 

So, against this backdrop, how will Millennials react to Amazon’s direct challenge? In June, Amazon announced it would acquire self-driving car startup Zoox for $1.2 billion, prompting Musk to call him a “copycat”. 

By Fred Dunkley for Safehaven.com 

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