Stocks have done well lately, and few parts of the market have been able to outperform the Nasdaq Composite (^IXIC 0.79%). With huge gains so far this year, it wasn't surprising to see the Nasdaq let up on the gas and coast into the Christmas holiday weekend. As of 11:30 a.m. EST, the index was higher by about 0.2%.
After taking a pause of its own, Tesla (TSLA 3.02%) once again made it onto the leaderboard, with solid gains that started taking the stock back toward its all-time highs. But one of the biggest winners on the Nasdaq was Pinduoduo (PDD 3.01%), as investors are hopeful that news affecting a major competitor could create a friendlier environment for the smaller company to make its mark on the huge Chinese market.
Tesla charges up
Shares of Tesla were higher by nearly 3% on Thursday morning. The move came as investors get used to the idea of not having a major index-addition event ahead of them, now that the automaker's stock is fully a part of the S&P 500.
Image source: Tesla.
Fundamentally, Tesla is gearing up for yet another last-minute push to get as many vehicles delivered to customers as possible. The company routinely tries to get in as many deliveries as possible under the wire at the end of each quarter. With so many people watching the automaker to see if it'll hit its production and delivery targets for 2020, CEO Elon Musk typically does everything he can to inspire employees to work harder to make the Dec. 31 deadline.
However, it's important not to underestimate the short-term trading impact that the S&P 500 addition had. Index funds had to buy roughly $90 billion in Tesla shares in order to match the performance of the newly constituted index as of the beginning of trading on Monday. Those that didn't buy -- regardless of the price -- risked failing to meet their investment objective of matching the S&P's performance.
It'll be tough for Tesla to match its 2020 performance in 2021. But many investors remain optimistic about its long-term prospects and believe the automaker has a lot more room to run higher in the years to come.
Alibaba's pain is Pinduoduo's gain
Meanwhile, shares of Pinduoduo were up 9%. The Chinese e-commerce upstart has seen its stock quadruple in price in 2020, and many are excited about the company's prospects for the future.
Already, Pinduoduo has done a good job challenging much larger rivals. Efforts like its innovative group-purchasing discount model have won over hundreds of millions of customers, catering to every consumer's desire to get in on a bargain. Moreover, with Pinduoduo largely making money by providing tools and services to merchants rather than selling merchandise of its own, the company gets recurring revenue that's less dependent on economic conditions.
Today's news that e-commerce giant Alibaba has received notice of an investigation from Chinese antitrust authorities has given investors in Pinduoduo a new reason for optimism. To the extent that regulators force Alibaba and other big-name e-commerce players in China to rein in some of their more aggressive competitive practices, Pinduoduo and other smaller upstarts stand to benefit.
Pinduoduo still faces some uncertainties, especially with regard to its plans to build out its own asset base and spend more capital to rely less on third-party providers. But at least for today, shareholders are happy about what they're seeing from the Chinese company, and 2021 promises to be an interesting year for Pinduoduo.
