The total market capitalization of Ford: Tesla’s market value increased by roughly this amount on Tuesday in the USA after the index operator S&P announced that it would include the stock in its S&P 500. After an even firmer opening, Tesla gained around 8 percent on the stock exchange by the end of trading, which corresponds to a total increase in value of a good 30 billion dollars. The entire company Ford with its capitalization of around 35 billion dollars cost little more on Tuesday.
Happy surprise after disappointment
Tesla fans and some observers had already expected inclusion in the S&P 500 as the world’s most important stock market index: One of the prerequisites for this are four profitable quarters, which Tesla had already achieved after the second quarter of this year. But the criteria are only a guide for the Index Committee, not a binding rule. And after the fourth win in a row was announced, nothing was heard from him about Tesla.
It stayed that way after Tesla reported another profit for the third quarter of the year in October. In contrast to three months before, speculation about the S&P admission was no longer as intense before and after. But after the disappointment in the summer, the positive surprise followed this Monday: Tesla will be included in the index on December 21, announced S&P Dow Jones Indices after the market closed.
Funds have to buy Tesla upon admission
This decision puts professional investors in a difficult position: Never before has a company with such a high market value been included in the index, and now trillions of dollars are passively invested in funds and ETFs that replicate the S&P 500 as closely as possible . According to the finance agency Bloomberg, Tesla will immediately be one of the ten companies with the highest weighting in the S&P 500 – and the funds must ensure that the share comes with a corresponding proportion in their portfolios, i.e. buy Tesla as soon as the step is taken.
And the price development on Tuesday was probably just a foretaste of what will happen at the end of December. Some investors who are not tied to an index have already turned to Tesla vigorously in order to benefit from the expected further increase. In order to keep the course caprioles limited, S&P invited to a consultation with important market participants: For the first time, Tesla could not be included in the S&P 500 in one fell swoop, but in two stages from mid-December.