S&P 500 Investors Have Lost Billions on Tesla Stock
Two years ago, Tesla (NASDAQ: TSLA) was one of the hottest stocks in the market. Its business was becoming increasingly profitable, and its stock was about to post one of the best years on record for any large-cap company. Moreover, the automaker got an invitation to join the S&P 500 (SNPINDEX: ^GSPC) index, adding to share gains as shareholders anticipated that index funds would be forced buyers of the stock at any price.
Fast-forward to today, and the late-2020 addition of Tesla to the S&P 500 has been costly for index fund investors. The electric vehicle (EV) pioneer's stock has not only given up big gains from 2021 but is now down significantly from its levels two years ago, even as the S&P has managed to post a positive return over the same time period.
S&P Dow Jones Indices gave index funds plenty of warning that they were going to add Tesla to their most influential index. More than a month passed between the time of the initial announcement of Tesla addition and the Dec. 21 effective date on which Tesla's stock price had a direct impact on the S&P 500. S&P analysts projected that in order to match Tesla's weighting within the index, index funds would have to pay about $90 billion to obtain shares. Many of them paid prices close to the split-adjusted $232 share price at the close of business on the preceding Friday, Dec. 18.
Source Fool.com
