Christmas is coming early for Tesla founder Elon Musk. He just leapfrogged Bill Gates to become the second-richest person in the world. Musk's net worth has risen over $100 billion to 2020 alone. Santa's little helper in this case is Standard & Poor's, which announced on Nov. 16 that Tesla will be joining the S&P 500 Index on Dec. 21. The stock is up 46.8% in the 13 trading days since then through last Friday's close, and 616% year to date. It's having its very own Santa Claus rally. Tesla is now the sixth-largest publicly traded U.S. company, with a market capitalization of $568 billion. It's almost wotht more than the entire S&P 500 energy sector! Tesla currently trades at forward price/earnings and price/sales of 153.6 and 12.5 respectively.
Are we partying like it's 1999 all over again? Tesla may be doing just that. In 1999, Yahoo! surged 64% in the 5 trading days between the announcement that it would be added to the S&P 500 on Nov. 30 and its inclusion after the close of trading on Dec. 7. Yahoo! was eventually bought by Verizon Communications (VZ) in 2017 at a price approximately 75% lower than where the shares traded the day it was announced that the company would join the S&P 500.
~ Ed Yardeni, Morning Briefing, Yardeni Research, December 8, 2020
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