The Smartest (and Most Profitable) Way to Play the Recent Tesla Snub

After a historic rally of 1,000% over the past year, Tesla has hit a bump in the road.

You see, S&P Dow Jones Indices rebalances its indexes every quarter. A company needs to meet specific qualifications to be considered, including four consecutive quarters of profitability. So, investors eagerly await to see what stocks get added and removed when this time rolls around.

And many expected Tesla to be listed on the list of new stocks being added to the S&P 500 – so imagine the panic when Tesla didn’t make the cut.

The decision not to add the stock to the S&P 500 surprised the entire market, especially those waiting for weeks on this decision, excited after Tesla reported a second-quarter profit in July. Tesla had ticked off many of the requirements needed to be considered for this index.

Tesla is now among the top 15 largest companies in the United States when measured by market capitalization – sitting at $320 billion. This makes the electric car marker the size of long-standing giants like Nvidia. And at one point, Tesla grew to be the seventh-largest company in the United States.

But size isn’t all that matters when it comes to the S&P 500.

Unlike other benchmarks, the S&P 500 isn’t driven by a strict set of rules or qualifications. Instead, the benchmark relies on a committee to decide what gets added and removed. Ultimately, Tesla didn’t satisfy the S&P 500 committee.

And this snub didn’t bode well for the electric car maker’s stock. Tesla shares were down 19% in early trading Tuesday, wiping out more than $70 billion in market value.

Before you jump at this new price tag, there’s something I want you to know. There’s a way you can play this TSLA snub scenario for the most profits… Full Story

The post The Smartest (and Most Profitable) Way to Play the Recent Tesla Snub appeared first on Money Morning – We Make Investing Profitable.

Before you jump at this new price tag, there’s something I want you to know. There’s a way you can play this TSLA snub scenario for the most profits…

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