It will not be long before Tesla officially becomes the newest addition among blue-chip companies.
The electric vehicle manufacturer is confirmed by the S&P Dow Jones Indices to join their court starting December 21.
The announcement comes from the stock market’s after-hours session on Monday.
this gave relief to investors who have been watching in the past months and have since experienced several disappointments.
In the past quarters, the company recorded consistent highs of profitability but is successively snubbed by the index.
With the setbacks, the Musk-owned company is finally able to carve its coveted niche in the coveted S&P 500.
After the announcement, shares of Tesla instantaneously jumped. It rose by 11% before the bell on Tuesday, even notching a 13% increase at one point of the session.
Such a movement added an estimated $40 billion to the company’s market value. This gave another boost to the reputation of its revolutionary owner.
Tesla Stocks on Buy
Tesla’s current market capitalization stands at $400 billion.
This cements it as one of the index’s blue-chip stocks as its value is approximately a hundred times more than smaller companies on the list.
According to S&P DJI, the addition of the EV manufacturer will require quite a lot of work.
This includes the requirement of investment funds indexed to the S&P to sell $51 million worth of stocks of member firms for the correct reflection of the listing.
In summer, the American EV maker hiked past the Japanese automobile leader Toyota to become to world’s most valuable car company.
Tesla’s soaring market value and its prominence among investors can potentially make it one of the S&P 500’s biggest constituents in the coming years.
This threatens an unbalanced weight of stock components in the range.
With this, the index considers splitting the addition of its stocks into two batches. Such a move would give the market more time to absorb the change.
