Tesla is Joining the S&P 500
On Monday, S&P Dow Jones Indices announced that Tesla shares are being added to the S&P 500, according to CarAndDriver.
Rumors of the highly volatile stock joining the index have been floating around for months. The company checked off all the boxes for inclusion with its second-quarter earnings report but was not added immediately. Now, Tesla's ticker, TSLA, will appear in the S&P 500 beginning Monday, December 21.
The S&P committee seems to finally be confident in Tesla and CEO Elon Musk. The inclusion of the stock that has previously been extremely volatile due to unpredictability from CEO Elon Musk marks a turning point. Tesla stock surged nearly 10 percent following the announcement, largely due to investors buying into the stock prior to its S&P 500 inclusion.
Tesla being included in the index opens up a new investor base. Funds, exchange-traded-funds, mutual funds, and others that follow the S&P 500 will have to purchase Tesla stock in order to balance their portfolios. Furthermore, due to Tesla's size, these entities will have to purchase a large number of Tesla stock to maintain the proper weight. Tesla is projected to enter as one of the 10 largest companies in the index.