Why is Tesla stock up today?
Posted By John W. B. Rich Posted On Comment (1)

Why is Tesla Stock up Today?

Why is Tesla stock up today? Tesla’s stock is up over 8% today to $480.52, approaching its all-time high of $502.49.

Tesla stock is up for a variety of reasons. This week’s rally started with news that Tesla would be included in the S&P 500 on December 21st. The stock popped 13% on Monday in after-hours trading, then faded a bit during the day Tuesday as many likely sold the news.

Today, Tesla is up big again, mostly on news that Morgan Stanley analyst Adam Jonas has boosted his price target for Tesla shares. His new price target is $540 per share because of the promising opportunities for Tesla in other areas besides just automobiles. For example, Jonas says that Tesla’s Network Services business will give Tesla a boost.

Jonas is often referred to as a “Tesla cheerleader”, so it is not surprising to see him give Tesla a positive report. Jonas’ report may just have kickstarted a rally today, which triggered “FOMO” buying by day traders looking to make a quick gain on sharply-rising Tesla stock.

Why is Tesla stock up today?

Tesla stock had been mostly flat for the last month or so, fading slightly from the $460 range since October 16th. However, the pop this week puts it on pace for new all-time highs. It is now only about 2.1% from its all-time high of $502.49 from August 31st.

The S&P 500’s inclusion of Tesla on December 21st is seen as a bullish catalyst because S&P 500 ETFs, index funds, and mutual funds will have to buy up Tesla shares in order for their funds to properly reflect the index.

Jim Cramer raised concerns that this poses a challenge for index funds, as adding a company as large as Tesla makes rebalancing difficult. Tesla would be the 8th-largest company in the S&P 500 if it were added today, so index funds will need to significantly reduce their holdings in other portfolio companies and/or buy large amounts of Tesla shares in order to achieve the correct balancing.

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