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ETFs to Surge as Tesla Turns to Profit, Secures S&P 500 Entry
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After the closing bell on Wednesday, Tesla Motors (TSLA - Free Report) cheered investors by reporting stellar second-quarter results amid the coronavirus crisis. It easily topped earnings and revenue estimates. In fact, the company reported profit for the fourth consecutive quarter, representing the longest streak of profitability in the company’s history. The profit has put Tesla in a position to join the coveted S&P 500 index, the condition analysts are wagering upon over the past few weeks.
Q2 Earnings in Focus
Adjusted earnings per share came in at 50 cents in contrast with the Zacks Consensus Estimate of a loss of $2.35. The company had incurred loss of $2.31 in the year-ago quarter. Revenues declined 4.9% year over year to $6.04 billion and edged past the Zacks Consensus Estimate of $4.96 billion.
Earlier this month, Tesla reported stronger-than-expected Q2 deliveries. The company produced 82,272 (75,946 Model 3 and Y, and 6,326 Model S and X) vehicles and delivered 90,650 (80,050 Model 3 and Y, and 10,600 Model S and X) vehicles. Though the delivery number is 4.8% down from the year-ago quarter, it is higher than 88,400 deliveries recorded in the first quarter. The increase came despite restrictions to curb the spread of COVID-19, which forced it to shut down its Fremont, CA, factory for most of the quarter. Now, the factory has successfully ramped production back to its prior levels (read: 5 ETFs to Drive High on Tesla's Solid Q2 Deliveries).
The electric carmaker did not provide an outlook for 2020, citing that it was still “difficult” to predict shutdowns and shifts in consumer sentiment for the second half of the year. It affirmed its goal to deliver at least half a million vehicles by the end of 2020 despite recent production interruptions.
Given robust results and chances of joining the S&P 500 index, shares of Tesla spiked as much as 7% in aftermarket trading on elevated volumes. The stock currently has a Zacks Rank #3 (Hold) and VGM Score of D. It belongs to a bottom-ranked Zacks industry (in the bottom 36%).
ETFs to Buy
Investors seeking to tap Tesla’s growth should buy ETFs having substantial allocation to this luxury carmaker. We highlight six of them in detail below.
This ETF follows the SoFi Social 50 Index and is composed of the top 50 most widely held U.S. listed stocks on SoFi Invest. Tesla takes the top spot with 13.1% allocation. The product has amassed $4.2 million in its asset base and charges 29 bps in annual fees.
This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 38 stocks, with TSLA occupying the top spot with 10.6% share. The product has accumulated $424 million in its asset base and charges 75 bps in fees per year.
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 46 stocks in its basket with Tesla occupying the top position at 10.8%. The ETF has amassed $1.9 billion in its asset base and charges 76 bps in annual fees.
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket with Tesla accounting for 10% share. The product has accumulated $49.8 million in its asset base and charges 58 bps in annual.
This fund offers a pure-play global exposure to 34 auto stocks by tracking the NASDAQ OMX Global Auto Index. Tesla is the top firm accounting for 9.3% share. CARZ has a lower level of $19.4 million in AUM and charges 70 bps in fees per year. The product has a Zacks ETF Rank #5 (Strong Sell) with High risk outlook (read: Auto Sales Plunge in Q2: ETFs & Stocks in Focus).
This fund offers exposure to the 30 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. Tesla occupies the top position in the basket with 9.3% share. FTXR has amassed $19.4 million in its asset base and charges 60 bps in annual fees. It has a Zacks ETF Rank #4 (Sell) (read: "Build Back Better" Plan of Biden to Boost These ETFs).
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ETFs to Surge as Tesla Turns to Profit, Secures S&P 500 Entry
After the closing bell on Wednesday, Tesla Motors (TSLA - Free Report) cheered investors by reporting stellar second-quarter results amid the coronavirus crisis. It easily topped earnings and revenue estimates. In fact, the company reported profit for the fourth consecutive quarter, representing the longest streak of profitability in the company’s history. The profit has put Tesla in a position to join the coveted S&P 500 index, the condition analysts are wagering upon over the past few weeks.
Q2 Earnings in Focus
Adjusted earnings per share came in at 50 cents in contrast with the Zacks Consensus Estimate of a loss of $2.35. The company had incurred loss of $2.31 in the year-ago quarter. Revenues declined 4.9% year over year to $6.04 billion and edged past the Zacks Consensus Estimate of $4.96 billion.
Earlier this month, Tesla reported stronger-than-expected Q2 deliveries. The company produced 82,272 (75,946 Model 3 and Y, and 6,326 Model S and X) vehicles and delivered 90,650 (80,050 Model 3 and Y, and 10,600 Model S and X) vehicles. Though the delivery number is 4.8% down from the year-ago quarter, it is higher than 88,400 deliveries recorded in the first quarter. The increase came despite restrictions to curb the spread of COVID-19, which forced it to shut down its Fremont, CA, factory for most of the quarter. Now, the factory has successfully ramped production back to its prior levels (read: 5 ETFs to Drive High on Tesla's Solid Q2 Deliveries).
The electric carmaker did not provide an outlook for 2020, citing that it was still “difficult” to predict shutdowns and shifts in consumer sentiment for the second half of the year. It affirmed its goal to deliver at least half a million vehicles by the end of 2020 despite recent production interruptions.
Given robust results and chances of joining the S&P 500 index, shares of Tesla spiked as much as 7% in aftermarket trading on elevated volumes. The stock currently has a Zacks Rank #3 (Hold) and VGM Score of D. It belongs to a bottom-ranked Zacks industry (in the bottom 36%).
ETFs to Buy
Investors seeking to tap Tesla’s growth should buy ETFs having substantial allocation to this luxury carmaker. We highlight six of them in detail below.
SoFi 50 ETF (SFYF - Free Report)
This ETF follows the SoFi Social 50 Index and is composed of the top 50 most widely held U.S. listed stocks on SoFi Invest. Tesla takes the top spot with 13.1% allocation. The product has amassed $4.2 million in its asset base and charges 29 bps in annual fees.
ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report)
This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 38 stocks, with TSLA occupying the top spot with 10.6% share. The product has accumulated $424 million in its asset base and charges 75 bps in fees per year.
ARK Next Generation Internet ETF (ARKW - Free Report)
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 46 stocks in its basket with Tesla occupying the top position at 10.8%. The ETF has amassed $1.9 billion in its asset base and charges 76 bps in annual fees.
MicroSectors FANG+ ETN (FNGS - Free Report)
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket with Tesla accounting for 10% share. The product has accumulated $49.8 million in its asset base and charges 58 bps in annual.
First Trust NASDAQ Global Auto ETF (CARZ - Free Report)
This fund offers a pure-play global exposure to 34 auto stocks by tracking the NASDAQ OMX Global Auto Index. Tesla is the top firm accounting for 9.3% share. CARZ has a lower level of $19.4 million in AUM and charges 70 bps in fees per year. The product has a Zacks ETF Rank #5 (Strong Sell) with High risk outlook (read: Auto Sales Plunge in Q2: ETFs & Stocks in Focus).
First Trust Nasdaq Transportation ETF (FTXR - Free Report)
This fund offers exposure to the 30 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. Tesla occupies the top position in the basket with 9.3% share. FTXR has amassed $19.4 million in its asset base and charges 60 bps in annual fees. It has a Zacks ETF Rank #4 (Sell) (read: "Build Back Better" Plan of Biden to Boost These ETFs).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>