Tesla value jumps US$40 bil as S&P 500 beckons

The logo of Tesla is seen at a Tesla Supercharger station in Dietikon Switzerland

Tesla, the world's most valuable vehicle manufacturer worth $400bn (£300bn), is set to join the S&P 500 index on December 21. Stocks jumped in after hours trading as money managers that track the S&P 500 clambered to add Tesla to portfolios.

Tesla is now the world's most valued auto company, and the news has already led to Tesla's shares running up more than 14% in after-hours trading, with the shape of the graph suggesting Tesla is very likely to beat its $500 record from earlier this year.

At $400 billion, Tesla's market capitalization is a hundred times that of the S&P's smaller companies, according to Refinitiv data, and potentially making it the biggest ever addition to the index.

Funds indexed to the S&P 500 will have to sell about $151 billion in shares in other S&P 500 companies and use those funds to buy TSLA stock.


As a result, the index 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", S&P Dow Jones Indices said. Additionally, based on its market value, Tesla would be one of the top 10 companies in the benchmark index upon entry.

More recent developments - the unveiling of Tesla's long term battery plan, and the roll-out of its "fully functional" Full Self Driving beta to select drivers - have not yet gained traction n in market value terms, as investors cautiously wait to see both new technologies come to full fruition. Tesla will account for about one percent of the index.

In 1999, Yahoo surged 64% in five trading days between the announcement that it would be added to the index and its inclusion. Shares popped more than 12% at Tuesday's opening bell.

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