Tesla stock price surged ahead in after hour trading as it announced that it would be included in the S&P in December. The stocks went up almost 12%, adding over $40 billion in market capitalization to the company. This surge was expected as a company’s stock price generally increases after it’s added to S&P 500 as funds tracking the Index generally buy into it.
Some analysts were surprised that Tesla was not included in the September shuffle as Tesla has been increasing profits continuously in the last five quarter.
“On November 16, 2020, S&P DJI announced that TSLA will be added to the S&P 500 effective prior to the opening of trading on Monday December 21 to coincide with the December quarterly rebalancing effective date.”
Tesla’s inclusion is a significant step forward. “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.”
S&P has not as yet mentioned which company will be removed from S&P 500, when Tesla starts trading on the exchange.