S&P Dow Jones announced that electric car maker Tesla will join the S&P 500 index next month. Shares in Tesla rocketed in trading on Tuesday and closed at $441.61, up 8.21% or $33.52.
With a market cap around $400 billion, the sheer size of Tesla stock is posing a challenge. The S&P 500 is a stock market benchmark made up of 500 large corporations that cover a diverse range of industries. Numerous stock funds attempt to mirror the performance of the S&P 500 and will be required to purchase Tesla shares for their portfolio.
Tesla will be added to the S&P 500 effective prior to the open of trading on Monday, December 21 to coincide with the December quarterly rebalance of the S&P 500. Due to the large size of the addition, S&P Dow Jones Indices is seeking feedback through a consultation to the investment community to determine if Tesla should be added all at once on the rebalance effective date or in two separate tranches ending on the rebalance effective date.
Tesla will replace a S&P 500 company to be named closer to the rebalance effective date.
Tesla stock has been a big winner this year, up over 387% so far and the company split its shares 5-for-1 at the end of last August.