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Tesla Joins S&P 500: Did It Deliver for Investors?
13 Sep
Summary
- Tesla stock has risen 57% since its split-adjusted S&P 500 debut.
- The S&P 500 index has grown approximately 105% in the same period.
- Tesla's revenue tripled, but its stock has underperformed the index.
Tesla's addition to the S&P 500 in December 2020 marked a significant event, with its stock closing at a record $695. This inclusion meant funds tracking the index effectively bought shares at that price. Following a three-for-one stock split in August 2022, the effective purchase price adjusted to $231.67 per share. As of today, the stock trades around $364, representing a 57% gain, or approximately 8% annually over nearly six years.
In contrast, the S&P 500 index has surged by about 105%, or roughly 13% annually, since Tesla's inclusion. This indicates that Tesla, despite its growth, has underperformed the very index it joined. The company has experienced substantial growth, with revenue more than tripling to over $100 billion and vehicle deliveries in the second quarter of this year approaching 2020's full-year total.
Tesla's energy storage business has also expanded significantly, with deployments increasing by 41% year-over-year. Net income over the past four quarters reached approximately $3.8 billion, more than five times its 2020 earnings. However, this figure is below the $12.6 billion earned in 2022. The initial market valuation at the time of its S&P 500 inclusion exceeded $658 billion, based on 2020 earnings that were a fraction of its current revenue.
