Tesla Motors (TSLA) will replace Oracle (ORCL) in the NASDAQ 100 Index, according to a NASDAQ OMX press release. The change will come into effect on July 15, 2013.
The addition validates Tesla’s growth story and reflects its success as an innovator. Tesla’s Model S is the hottest electric car on the market after winning countless awards for excellence and providing industry-leading luxury, design, and battery range. Tesla has an electric crossover SUV in the pipeline and recently unveiled battery swap stations, which allow drivers to swap out their used battery for a fully charged battery in around 90 seconds.
Tesla has delivered from a financial standpoint as well. It reported its first profit last quarter of $15 million on record sales of $562 million, up from just $30 million in sales the previous year. Tesla has also paid back its government loan ten years early, indicating that its growth strategy is far ahead of schedule.
Moreover, Tesla’s addition to the NASDAQ 100 is not only a major milestone for the company, but could also provide significant value to shareholders. Mutual funds and ETFs that are designed to reflect the value of the NASDAQ 100 must purchase shares of Tesla to accurately reflect the index’s underlying components. This buying can propel the stock higher, providing shareholders with additional gains.
Meanwhile, Oracle’s story has been quite the opposite. The company’s previous two horroendous sales numbers spooked investors that the company is failing to execute financially and losing market share to younger, more aggressive cloud software companies life SalesForce.com (CRM). The company announced last month that it plans to move to the New York Stock Exchange, although its motives remain unclear. The stock is down nine percent over the last six months.
Meanwhile, Tesla shares reacted positively to the news, rising three percent to a fresh all-time high of $125.32. Shares are up almost 300 percent over the last year.
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