I just did the math and it looks like about 600,000 shares will need to be acquired by the Exchange-traded funds tracking the NASDAQ 100 index (Remember, the full market cap of the Nasdaq-100 is about $3 trillion).
So these ETFs will be required to own about $89 million worth of Tesla shares, based on the total dollar value of funds aligned with the index. The biggest of these, the PowerShares QQQ fund, will account for roughly 88% of the total Nasdaq-100 ETF holdings,or about $78 million worth of Tesla stock. I am certain they already got theirs, so that leaves about 89,000 shares that might need to be purchased by other ETFs.
This is a non event, since over 6million shares a day have been changing hands lately.
Sentiment: Strong Sell
The QQQ is a capitalization-weighted index, so the impact of a 15 Billion market cap isnt going to be much.
For an example of how this sort of news can affect the price, consider Netflix. Just recently, on May 31 2013 it was reported that Netflix would be added to the QQQ. On the date of the announcement, NFLX closed at 226.25. The following trading day, Monday June 3rd, NFLX closed DOWN over 4 points at 221.97.
On Thursday June 6th, 2013, the date NFLX was added to the Index, it closed at 217.74.
This announcement does not mean that TSLA is going to jump in price.
Sentiment: Strong Sell
Stocks usually see a slight gain after the announcement of inclusion in the Nasdaq-100, as investment funds that track the index must buy the shares. Barclays has found that companies being added to the index usually gain 1.2% from the closing price on the day of the announcement to the opening price the following day.
Where do the starting number of shares come from in the Index? Not trying to be funny here. I really would like to know when a stock is first put onto an exchange where do the shares come from that make up the weighted shares in the index.
Sentiment: Strong Buy
I don't know if this is like the SP 500, but clearly any ETFs that follow this index MUST BUY SHARES by definition.
ProShares issued by ProFunds offer other related NASDAQ-100 ETFs such as the 2x NYSE Arca: QLD, which attempts to match the daily performance of the NASDAQ-100 by 200% and the Inverse 2x NYSE Arca: QID, which attempts to match the inverse daily performance by 200%. For replicating 3x performance; there is the NASDAQ: TQQQ and for Inverse 3x, NASDAQ: SQQQ. ProFunds also issues Inverse Performance NYSE Arca: PSQ for a bearish strategy on the index.
Per Nasdaq website:
An investment in NASDAQ-100 Index Tracking Stock should be made with an understanding that the NASDAQ-100 Trust will not be able to replicate exactly the performance of the Index because the total return generated by the securities held in the Trust will be reduced by transaction costs incurred in adjusting the actual balance of the securities and other Trust expenses, whereas such transaction costs and expenses are not included in the calculation of the Index. It is also possible that for short periods of time, the Trust may not fully replicate the performance of the Index due to the temporary unavailability of certain Index securities in the secondary market or due to other extraordinry circumstances. Such events are unlikely to continue for an extended period of time because the trustee of the Trust is required to correct such imbalances by means of adjusting the composition of the Trust.
Long story short - there are funds which must buy the shares to match the performance of the index