Tesla Earnings Flirt With S&P 500, Perhaps Boosting This ETF

It’s usually good to be the king and that’s particularly true of ETFs that are among the kings of Tesla exposure, including the ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ).

ARKQ allocates nearly 11% of its weight to Tesla, one of the highest allocations to the electric vehicle juggernaut among all ETFs. That positions the ARK fund to benefit from another impressive batch of earnings from Tesla and, perhaps, the company’s entry into the S&P 500.

Tesla Inc. managed to stay profitable even in the midst of a global pandemic, but something is still nagging at Elon Musk: the electric-car maker isn’t growing fast enough,” reports Bloomberg. “The positive quarterly earnings Tesla reported Wednesday were its fourth in a row, again surprising Wall Street analysts and possibly paving the way for its soaring stock to join the S&P 500 Index.”

ARKQ captures the converging industrial and technology sectors, capitalizing from autonomous vehicles, robotics, 3D printing, and energy storage technologies. That wide mandate helps lever the ARK fund too much more than just self-driving cars, an important trait at a time of rapid robotics advancements.

Tesla Tempts

Disruptive technology is not relegated to certain sectors as it will permeate into all industries in some form or fashion. For example, AI is gaining widespread attention for its ability to be a disruptive technology that spans across a variety of sectors.

Tesla’s latest earnings “validate the unconventional efforts that Musk made to shore up earnings in the midst of the health crisis that’s expected to leave other U.S. automakers posting losses. The profit further boosted Tesla’s already lofty share price, which has quadrupled since March in part based on speculation the stock could be added to the S&P 500,” according to Bloomberg.

What makes ARKQ increasingly relevant in today’s investing landscape is that it features a harmonious approach to accessing automation and innovation whereas some rival funds emphasize one, but not both of those concepts. Additionally, automation often gets a bum rap because it’s seen as a jobs killer, but the opposite could prove true over time.

“Tesla reported a profit of 50 cents a share on a GAAP basis Wednesday, beating analysts’ consensus estimate for a loss of $1.06 a share. Revenue fell from a year ago to $6.04 billion, topping analysts’ expectations for $5.4 billion,” according to Bloomberg.

For more on disruptive technologies, visit our Disruptive Technology Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.