Tesla to join S&P 500 index, further boosting share price

Electric vehicle manufacturer Tesla is to join the S&P 500, with the announcement sending its share price up by over 10%.

The stock market index, which is one of the most influential and widely followed, tracks 500 large companies listed on US stock exchanges. Tesla’s admission sees it join the likes of Microsoft, Amazon, Apple and Alphabet, to name a few, who have all experienced bumper years thanks to rising stock prices. 

The announcement said 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.”

The company’s place reflects the fact of it being perhaps the greatest beneficiary of that trend, hovering around a $400bn valuation, making it the world’s most valuable car company. Its technological approach has proved influential, with competitors scrambling to adopt features such as over-the-air updates and self-driving technology.

The scale of its recent growth led the S&P 500 to consider how best to add the company, saying: “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.”

The development comes off the back of last month’s news of record sales and a fifth successive example of quarterly growth, per its announcement of financial results for the third quarter of the 2020 financial year.

It is yet to be announced which company will be booted out of the S&P 500, with the announcement simply saying: “Tesla will replace a S&P 500 company to be named in a separate press release closer to the rebalance effective date.”