Tesla shares pop again on confirmation that firm will join S&P 500
Tesla shares jumped 14 per cent yesterday after it was announced that the electric car maker would join the S&P 500 index in December.
The admission comes on the back of five consecutive quarters of profit at the California-based firm, which has thrived amid the coronavirus pandemic.
Shares in Elon Musk’s company have risen around 450 per cent this year, meaning that Tesla is currently the world’s most valuable car maker.
With its stock market value currently over $400bn, Tesla’s admission to the bourse will be one of the largest in history.
As a result, the admission might take place in two separate tranches, the officials at the S&P 500 warned.
“Tesla will be one of the largest weight additions to the S&P 500 in the last decade, and consequently will generate one of the largest funding trades in S&P 500 history,” they said.
In addition, the inclusion of the auto firm will mean that investment funds will have to buy $51bn in its stock so that their portfolios correctly reflect the index.
Tesla’s record year comes in spite of the fact that it produces a fraction of the number of cars as auto giants such as Volkswagen and General Motors.
Sceptics say that the stock is a bubble and have warned against admitting it to the bourse.
To be added to the index, a company must report four consecutive quarters of growth.