$10,000 in Tesla When It Joined the S&P 500 Would Be About $15,700 Today. An Index Fund Would Have Done Better.

Since joining the S&P 500 on December 18, 2020, Tesla has significantly underperformed the benchmark index despite substantial operational growth. A $10,000 investment in Tesla at its index inclusion closing price of $695 (split-adjusted to $231.67) grew to approximately $15,700, reflecting a 57% total return or roughly 8% annualized. In contrast, the same capital invested into an S&P 500 index fund expanded to roughly $20,500 before dividends, generating a 105% gain or about 13% annually. While Tesla's fundamentals expanded substantially—with trailing-12-month revenue surpassing $100 billion compared to $31.5 billion in 2020 and quarterly vehicle deliveries reaching 480,000 units—the stock was held back by severe valuation multiple compression from over 900 times earnings to roughly 330 times earnings. Heavy capital expenditures into autonomy and robotaxis, reaching $5.8 billion in the second quarter, have compressed operating margins to 1.4% and turned free cash flow negative. The analysis warns that today's elevated valuation multiple already discounts substantial future autonomous driving success, mirroring the valuation risks that led to underperformance over the prior six years.