Tesla (TSLA) shares jumped 10.20 percent at the close of trading on Wednesday, up nearly 427 percent since the beginning of the year. The company’s stock kept surging for 2nd day as the S&P Dow Jones Indices on Monday announced plans to include the shares of the electric car manufacturer in the benchmark S&P 500 index in December. The company’s stock gained 19.25 percent in last 2 trading sessions.
In the S&P 500, Tesla may become one of the most valuable firms, and its share in the index may surpass 1 percent. Tesla’s share price was $486.64 at the close of trading on Wednesday, with a market capitalization now reaching to $421.95 billion.
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Analysts suggested that, given the high growth in the stock since the beginning of the year the decision to add Tesla to the S&P 500 was expected. Therefore, the Nasdaq 100 index, which already contains Tesla stock, increased by 37.56%, and the S&P 500 reported a rise of just 12.26% on the day.
Tesla’s inclusion would also trigger an enormous number of purchases by investment funds which follow the S&P 500 index. Passive index funds would need to purchase around $58 billion worth of Tesla shares, according to Freitas’ estimates.
Tesla is going to be one of the largest gains in weight in the past decade, according to S&P Dow Jones. In view of this in a separate press release, the Index Commission requested investors to express their opinion as to whether Tesla should be included immediately on 21 December or in two rounds, with the first on 14 December. This procedure would also make it easier for index funds to gradually change their portfolios which are anticipated to be a trade of around $51 billion.
The addition to the benchmark index, long subject to Wall Street skepticism, will represent a historic milestone for Elon Musk’s business. Many ups and downs have been faced by the electric car manufacturer, but the company has managed to achieve profit over the past five months, and Tesla Inc.’s (TSLA) management has set itself many fresh plans to grow and improve the business.