16:25
Traffic jam:   4
$
92.2628
99.7057

Tesla will be added to S&P 500 on 21 December

2 December 2020
2889
2 min.
10
Tesla will be added to S&P 500 on 21 December

Adding to S&P 500

The S&P Dow Jones Indice Index Committee decided to add Tesla shares to the S&P 500 in one step after consulting with investors. The addition will force the index funds to buy these shares for about $73 billion.

Tesla shares (TSLA) rose 5% during trading on Tuesday after the S&P Dow Jones Indice Index Committee announced on Monday that they will be added to the S&P 500 in one stage before the opening of trading on 21 December. Another positive news for Tesla on Monday was that it had received approval from the Chinese authorities to start selling its Shanghai Model Y SUV. As Tesla will be the largest company ever added to the S&P 500, the committee was consulting with investors to decide whether to add it in one or two phases. Paul Hickey, the founder of the Bespoke Investment Group, said: "This step by the committee shows us how unique this situation is".

According to the announcement, the committee will name the company to be replaced by Tesla on 11 December. S&P DJI also noted that adding Tesla shares to the most popular Wall Street index will force index funds to buy around $73 billion for their portfolios. This will force index fund managers to sell shares in other companies, which will cause volatile trading.

For their part, Goldman Sachs experts recently said that adding Tesla to the S&P 500 could lead to a demand of $8 billion from active, large-cap U.S. mutual funds, but when index funds are included, that figure would be much higher.

Tesla shares have risen sharply by almost 40% in the two weeks since the announcement of the addition of the company to the index. Tesla is currently the most expensive car company on the market, with a market capitalisation of $527 billion. This is higher than the market value of Toyota MotorVolkswagen and General Motors combined, although Tesla production is only a small fraction of these competitors. In the S&P 500 list of largest companies, Tesla may rank between Berkshire Hathaway and Visa (V).

Moreover, the company's shares could fall by around 10-20%, which is consistent with what happened to Facebook (FB) after the shares were added to the S&P 500 seven years ago.

Persons1 and Companies9 in the news

Director and Co-founder of Bespoke Investment Group
1 place
Volkswagen
1 place
DJI
DJI
3 place
Tesla
6 place
Visa
7 place
Meta (Facebook)
8 place
Goldman Sachs
9 place
Section:

Discussion

Rating companies
Tesla
14 Mention
Instagram
13 Mention
JP Morgan Chase
12 Mention
Walt Disney Company
12 Mention
Ford Motor Company
10 Mention
Netflix
10 Mention
Amazon
9 Mention

NEW YORK NEWS

News from GlobalNY.biz is the freshest and most relevant information about high-profile events in the region. The task of the resource's news feed is to convey to readers with maximum accuracy and objectivity information about important events in business, politics, economy, healthcare, culture and other spheres of life in New York.
GlobalNY.biz news is a coverage of economic processes taking place in New York, the latest news of public life, incidents and an overview of political events. New York news is information about the activities of small and medium-sized businesses, the work of housing and communal services and utilities, the implementation of significant projects.
The site's journalists describe not only the life of the region, but also talk about the current state of the US economy. Everything you need to know about innovations in the field of industry and agriculture, economy and power is collected in the "News" section at GlobalNY.biz.
New York news quickly informs the reader, shows the real picture and opens up hot topics. Communication with government structures and business enables us to provide our readers with reliable, information-rich material. The main page of the portal contains the key news of New York!
Alena Potapova

Development Director
Population
8112891403
Died this year
14430665
Born this year
35501990