Tesla buy report by Nuclo

In this report by Nuclo Independent CIO’s head of global equities Claudio Brocado, with a special contribution by options expert Simon Ree, we discuss the long-term case for the global leader in electric vehicles (EVs), Tesla. The largest company not to be a constituent of the S&P 500, Tesla is finally being added to the index next month.

The stock has been considered too speculative (and its valuation not grounded in fundamentals) by the vast majority of institutional investors. Many professional managers could afford to simply ignore TSLA, given that it was not part of the arguably best known benchmark for professional equity investors in the US.

Going into the index with a weight of well over 1%, portfolio managers can no longer ignore Tesla. We provide more details on this and  other factors in the report, but S&P 500-benchmarked investors who do not have a view on the stock are likely to own an index weight in the security. Indexed ETFs have no choice but to buy it at full index weight.

As more professional research resources are committed to Tesla, investors’ understanding of it will improve, boding well for the long-term prospects of the shares, despite their perceived current overvaluation. To us, the TSLA story is not unlike that of AMZN twenty years ago. The volatile shares will provide also plenty of opportunities to add value through trading around a core long-term position near index weight. Please read the full report for more.