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

Tesla stock purchased at $695 when it joined the S&P 500 in December 2020 has returned 57% over nearly six years, translating to roughly 8% annually. However, an S&P 500 index fund investment would have grown the same $10,000 to approximately $20,500 (13% annually), significantly outperforming Tesla. Despite the company tripling its revenue and achieving profitability, most of its growth was already priced into the initial valuation, causing the stock's P/E ratio to compress from 900x to 330x earnings.