Tesla will be the most valued company within the stock index if it is to be added in December.
The S&P 500 have recently announced that Tesla Inc. is set to be added to the stock index come the 21st of December. This announcement promptly sent the stock prices of this Silicon Valley electric car manufacturer soaring by 14% on Monday (16th November), in a flurry of after-hours trading.
To those unfamiliar, the Standard and Poor’s 500 is measures the stock performance of a select group of 500 large American companies listed on stock exchanges in the United States. Long considered to be a reliable indicator of America’s economical health, the addition of Tesla into the stock index will be the third automaker to be included, with the other two being Ford and GM.
Tesla, being the most valuable automaker in the world to date, is reported to be among the most valuable companies to be added to the stock index to date. If its current potential market cap of over $400 billion holds till the date of its inclusion into the stock index, the EV manufacturer will possibly be the ninth most valuable company on the list. Slotting in between Johnson & Johnson and Proctor & Gamble, and way higher than both GM and Ford, who are currently occupying the the 130th and 194th spot on the list.
Therefore, the automaker will most probably be joining the stock index in two tranches, to make it easier for investment funds to digest. The S&P 500 have stated that the inclusion of Tesla is to be the one of the largest weight additions to the stock index in the last decade, accounting for 1% of the entire value of the index. Thus will most likely generate one of the largest funding trades in S&P 500 history.
Posting 5 quarters of straight profits and delivering an impressive 139,300 EVs in the most recent quarter to date despite an ongoing global pandemic, Tesla was initially rumoured to join the S&P 500 during its September reshuffle. However for undisclosed reasons, it is only to be added in this upcoming December reshuffle of the stock index.
No word thus far yet on which company will be dropped from the index. More news is to come regarding this matter closer to the date of Tesla’s addition. Nevertheless, it will certainly be interesting to see the market’s (and the wider auto industry’s) reaction to this news in the coming weeks and months.
