Tesla Posts Fourth Consecutive Profit, Paves Way for S&P 500 Inclusion
Tesla surprises Wall Street with a second-quarter profit, achieving a full year of positive earnings that qualifies the electric vehicle maker for S&P 500 inclusion. The milestone drives the stock higher and puts massive pressure on short-sellers.
Tesla reports its fourth consecutive quarterly profit, earning $104 million in net income on $6 billion in revenue during the second quarter of 2020. This result easily beats Wall Street expectations, as analysts had anticipated a loss of roughly $250 million. The achievement makes Tesla a rare bright spot in an auto sector that struggles significantly amid the global pandemic.
This milestone marks the first time Tesla achieves a full year of positive earnings, which serves as a key requirement for inclusion in the S&P 500 index. Joining this major market index forces many index-tracking investment funds to buy the stock, a dynamic that potentially drives the share price even higher. Following the news, Tesla shares rise approximately four percent in after-hours trading, adding to a massive 49 percent surge earlier in July.
The rising stock price creates a difficult situation for short-sellers who bet against the company, with nearly $19.7 billion currently positioned against Tesla. Despite the broader economic downturn, CEO Elon Musk expresses extreme optimism, stating that consumer demand remains incredibly strong. However, actual inclusion in the S&P 500 remains pending, as the index committee still needs to make a final decision on when to add the company.