A Tesla vehicle is seen at a dealership in Miami, Fla.
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S&P Dow Jones Indices will add Tesla Inc. to its benchmark S&P 500 index all at once when it takes the action on Dec. 21.
The index manager had consulted with investors as to whether add Tesla
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all at once or in tranches. The consultation ended Nov. 20 and underscored the complexity of adding Tesla, valued at more than $551 billion, to the benchmark index.
Shares of Tesla rallied 5% in extended trading Monday after the news.
“S&P Dow Jones Indices (“S&P DJI”) has determined it will add Tesla to the S&P 500 at its full float-adjusted market capitalization weight effective prior to the open of trading on Monday, December 21, 2020,” the index manager said late Monday.
“S&P DJI considered the wide range of responses it received, as well as, among other factors, the expected liquidity of Tesla and the market’s ability to accommodate significant trading volumes on this date,” it said.
The index manager said it will announce which company will leave the S&P 500 to make room for Tesla on Dec. 11.
Joining the benchmark index for U.S. equities puts Tesla stock in the portfolios of countless index-tracking funds, cascading to the many managed funds that would have to add Tesla to their holdings to balance their portfolios.
The electric-car maker is by far the largest company to be added to the benchmark index. If added on Monday, it would be the sixth-largest company on the index by market value.
The pending S&P inclusion was the latest boost to the stock, sending its market cap soaring above $500 billion from a January valuation around $100 billion.
The shares have gained 594% this year, compared with gains around 11% for the S&P 500
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