Industry Updates

Tesla set to join S&P 500 in December

Move will result in $51bn inflows into Tesla from index funds and ETFs

Tom Eckett

Tesla supercharger

Tesla is set to be added to the S&P 500 for the first time in December in a move that could see $51bn inflows into the electric vehicle manufacturer from index funds and ETFs.

Effective when the next quarterly rebalance takes place on 21 December, Tesla will be one of the top 10 biggest companies in the S&P 500 with a market cap value of $400bn.

This makes the EV maker the biggest inclusions in the S&P 500 over the past decade and will account for roughly 1% of the index.

As a result, S&P Dow Jones Indices (SPDJI) is consulting with the investment industry to see if Tesla should be added all at once or in two separate tranches.

“Tesla will be one of the largest weight additions to the S&P 500 in the last decade, and consequently will generate one of the largest funding trades in S&P 500 history,” SPDJI said.

On the news, shares in Tesla jumped over 13% meaning the company is up just under 400% so far this year.

The decision to include Tesla comes just months after the EV manufacturer was snubbed from the flagship index’s rebalance in September.

This prompted a closer look the SPDJI’s index committee which decides which stocks to include in the various indices.

Unlike other indices, this makes SPDJI’s selection process unique as there is discretion involved in the decision-making process rather like an active manager.

Tesla reported its fifth consecutive quarterly profits in Q3, one more than the number required to be considered in the S&P 500.

Elon Musk’s company posted Q3 profits of $8.8bn with over 139,300 vehicles delivered, a new record for the rapid company.

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