Tesla will finally be added to the S&P 500 index, the commission responsible for the index announced after closing markets on Monday. The change will take effect on December 21.
Tesla’s share price jumped 1
People have trillions of dollars in index funds that track the S&P 500. This means that when a stock is added to the S&P 500, fund managers have to add it to their portfolios, raising the stock price.
Tesla could be included in the S&P index from September. The rules require a market capitalization of at least $ 8 billion – Tesla is over $ 400 billion – and that a company must be profitable, on average, over the previous four quarters. Tesla has met these criteria since announcing its fourth consecutive winning quarter in July.
But the commission that selects shares for the S&P 500 took away Tesla in September. His shares fell 15 percent on the news. Tesla then reported a fifth of its profits in October, and now the S&P Commission is finally adding Tesla to its index.
According to CNBC, Tesla is the most valuable company ever added to the S&P 500. Most companies make the list while being far less valuable. CNBC predicts that Tesla will be one of the 10 most valuable stocks in the S&P 500.
Tesla’s share price has risen fivefold in 2020, making Elon Musk one of the richest people in the world. Bloomberg estimates that it now costs more than $ 100 billion.