The company, which has currently a stock market value over $400bn, fulfilled all the requirements to be included onto the US index. The S&P500 index is one of the global benchmarks in the world of stock exchange investment. On December 21, the Californian car maker is set to enter the batch of companies included in the S&P500 index, that measures the stock performance of 500 large companies listed on stock exchanges in the United States. Seventeen years of life, pioneering products, many controversies and now a market capitalisation that makes it the most valuable car-company in the world. By Beatriz Da Silva
Following the news that Tesla was being added to the index, its share price surged about 14% in New York, after the market closed. The company’s rise emerged in anticipation of a $51 billion trade by index funds adjusting their holdings. With a stock market value over $400bn, Elon Musk’s personal fortune has shot up by more than $15bn – which can turn him into the world’s third richest person. This comes as the cherry on top of a successful weekend for Elon Musk, whose rocket company SpaceX sent four astronauts to the International Space Station.
In September, Tesla achieved four consecutive quarters of profits, another relevant admission criterion – yet, the commission that assesses the composition of the index left it out. As the reasons are never public, it was speculated that this could have to do with the fact that the most recent quarterly profit depends heavily on the sale of regulatory credits to other manufacturers and not so much on the manufacture and car sales. But everyone knew it would be just a matter of time. Currently, to enter the S&P500, companies must be headquartered in the United States, have a market capitalisation of more than $8.2bn, have a minimum of 50% of the shares available to the public and have four consecutive profitable quarters.
Tesla joins as one of the 5% largest companies included in the index, where the ten bigger are Apple, Microsoft, Amazon, Alphabet, Facebook, Johnson & Johnson, Berkshire Hathaway, Visa, Procter & Gamble and JPMorgan Chase bank. But, in total, Tesla represents 1% of the index. Its inclusion means investment funds indexed to the S&P500 will have to sell about $51bn worth of shares of companies already in the S&P500 and use that money to buy shares of Tesla, so that their portfolios match the index, according to S&P Dow Jones Indices. The California-based car firm has become the most valuable auto company in the world despite producing a fraction of its rivals Toyota, Volkswagen and General Motors.