Thread by @greentheonly

A financial diversion for this Sunday. In the EAP comments many highlighted how "showing profit" is important for "S&P inclusion".
Now I am not a financial person and don't even play one on TV so I asked them how is the S&P inclusion important and got answers that don't add up

hopefully some actually smart and financially smart people can explain to me all of this?
namely Why S&P inclusion is important and good for both Tesla and shareholders.

I'll start with what I learned so far and what I think the holes in the logic are

In no particular order:

1. "It will create a short squeeze"
Now what good is out of it other than a momentary stock run up and then fall back to Earth? In fact would it even run up? unlike the much touted VW example, S&P inclusion does not mean the stock is going private (= forced liquidation of shorts)

2. "It will reduce float which will increase stability", usually goes with "funds will hold a big amount and not trade" and "will reduce FUD as stock manipulating exercise".

I would imagine reduced float should instead lead to INCREASE in volatility though? Here's an extreme

example. There are 100 coconuts on this island. 98 are hoarded by a stockpile operation and remaining two are the "float".
It is extremely easy for the holder of the float to manipulate the price by either selling super cheap or super expensive to distort the "market price".

If you think about it, the "short squeeze" itself was demonstration of induced stock price instability on reduced float.

Additionally Elon already owns 20% of Tesla stock and is not trading - that's much more of a buffer than what various index funds can purchase.

additional factor here is the funds are super inclined to loan the stock they hold (it's a source of extra income for them after all) so probably the whole "float reduction" theory might not come to fruition at all? IS there a study on stock volatility pre/post S&P inclusion?

3. "regular people are more likely to buy it" I assume via index funds? Various index funds were 17% of the market it seems and S&P ones are just a fraction. But more importantly what's the benefit to Tesla and shareholders in this?
It's not like they have shortage of buyers

of their stock as was recently demonstrated by their $5B ATM offering that sold easily without any impact on the stock price.

Additionally inclusion into S&P is not a prerequisite for Tesla stock inclusion in various non-index funds.

So I really hope somebody can clear it up for me, show me where I am wrong in my logic and so on.

Thank you.