Tesla’s investors, whether direct through the company shares or indirect through active or passive funds, have now effectively become holders of cryptocurrency Bitcoin, without actually buying it. This happened as Tesla’s famed CEO Elon Musk invested a staggering $1.5 billion of the company’s money into buying Bitcoin. Elon Musk also said that Tesla will accept Bitcoin as a form of payment soon.
This gives Tesla shareholders exposure to the popular cryptocurrency — some might welcome it, considering the meteoric surge in Bitcoin prices; yet, some others may not like the risk and volatility that come along. Notably, it’s not only the direct Tesla shareholders that now have Bitcoin exposure, but those with indirect and passive investments too, such as S&P 500 index, several Vanguard index funds, Fidelity group funds, and many more.
Mutual funds, pension funds, sovereign funds, and other investors in Tesla
Nearly 2,400 institutional investors hold more than half of the $783-billion Tesla shares. These include mutual funds, sovereign wealth funds, and even pension funds, among others. Recently, passive fund manager Vanguard group said it has 6.1 per cent stake in Tesla, or 5.78 crore shares. Vanguard has become the largest institutional shareholder in Tesla, with its stake valued at over $47 billion. Fidelity group is the fifth-largest institutional shareholder in Tesla with 2.8 per cent equity stake worth about $22 billion.
Passive investments in Tesla
Tesla, owing to the sheer size of its market capitalization, is a major constituent in several popular stock indices, attracting huge amounts of passive fund inflows. Tesla is the 6th largest stock by weightage on the marquee US index S&P 500. The stock single-handedly makes up for over 14% of S&P 500 Consumer Discretionary index, and over 10% of NYSE FANG+ index.
Tesla stock in some popular stock indices:
- 1.86% of S&P 500 index
- 2.81% of S&P 100 index
- 14.67% of S&P 500 Consumer Discretionary Sector GICS
- 3.53% of Nasdaq Composite index
- 4.86% of Nasdaq 100 Stock Index
- 1.53% of Russell 3000 Index
- 10.15% of NYSE FANG+ Index
- 2.32% of MSCI World ESG Leaders Index
The love for Bitcoin
Last week, California-based Tesla said in a filing with the US Securities and Exchange Commission (SEC) that it has updated its investment policy, which will provide more flexibility to diversify and maximize returns on cash that is not required to maintain adequate operating liquidity. Bitcoin price surged to an all-time high, surpassing $49,000-mark following Tesla’s investment. In recent weeks, Elon Musk has been tweeting a lot about cryptocurrencies such as Bitcoin and Dogecoin, which has been driving up prices.
Elon Musk’s tweets send Bitcoin, Dogecoin prices soaring
So far in 2021, Bitcoin has delivered a massive 60.38 per cent returns. In January this year, Musk added hashtag bitcoin to his Twitter bio, which sent Bitcoin prices soaring. With gains of more than 90,00,000 per cent in the decade gone by, Bitcoin became the best performing asset in the last 10 years. Earlier this month, Dogecoin price soared by 50 per cent after Musk tweeted ‘Doge’ and then followed it with another tweet ‘Dogecoin is the people’s crypto’ and ‘No highs, no lows, only Doge’.
Tesla: The darling of stock markets, bigger than Facebook, Alibaba, Berkshire Hathaway
Tesla is the seventh-largest company in the US by market capitalisation ($783 billion), only behind Apple, Saudi Aramco, Microsoft, Amazon, Alphabet (Google) and Tencent. With the recent stock price surge, Tesla is ahead of Facebook, Alibaba, Berkshire Hathaway, Samsung, Visa and JP Morgan Chase. Tesla shares debuted on S&P 500 on December 21, 2021, but the news of new coronavirus strain in Britain weighed on markets. On its first day on S&P 500, Tesla stocks fell 5 per cent to $659.99. Tesla stock closed at $816.12 in overnight trade on Friday, February 12, 2021.