ETF provider GraniteShares says investors are looking for a rise in the Tesla share price when the stock joins the S&P 500 on 21st December. The fund manager has 3x short and 3x leveraged ETPs on Tesla listed on the London Stock Exchange, and between 1st and 18th December, the value of trades in its leveraged long vehicle was 130% more than the value traded in its short ETP ($14 million versus $6.08 million).
Will Rhind, Founder and CEO at GraniteShares said: “Tesla has been an incredible story in 2020 capturing interest on both the long and short sides of the trade. Historically there has been more interest in our 3x short Tesla ETP than the 3x long version, with more investors expecting a fall in the share price rather than a continued rise. However, the stock has risen over 708% this year, and more recently, we have observed trading volumes favouring the 3x long version over the short suggesting that these investors believe it has further to climb”.
“Much of Tesla’s growth has come from its car sales, boosted by strong demand from China and hopes of subsidies for electric vehicles. Many investors also believe there is strong growth to come from other parts of Tesla’s business including its self-driving software and battery power storage.”
Tesla should have a weight of approximately 1% in the S&P 500 index and rank as approximately the 14th largest stock in the index. Tesla will be the largest addition to the S&P index since Facebook joined in December 2013 at a weight of 0.6%.
GraniteShares has a number of 3x leveraged single stock ETPs listed on the London Stock Exchange. They cover a selection of FTSE 100 companies and popular U.S. tech stocks.