Tesla Inc. stock rallied more than 9% after hours Monday after S&P Dow Jones Indices said it will add the electric-car maker to the S&P 500 at the start of trading on Dec. 21.
Joining the benchmark index for U.S. equities puts the stock in the portfolios of countless index-tracking funds, and the many managed funds that would follow suit to balance their holdings.
The announcement was months in the works after Tesla TSLA,
The Dec. 21 date coincides with the S&P 500’s SPX,
Due to the size of the addition, S&P Dow Jones Indices is seeking feedback from investors to determine whether Tesla should be added all at once or in two separate tranches, it said.
The inclusion “is a major feather in the cap for the Tesla bulls after much agonizing around not getting into the S&P 500 in early September,” Dan Ives with Wedbush said in a note Monday. “We believe the sustained profitability trajectory as evidenced in the September quarter was the final straw that got Musk & Co. into the S&P 500 this time around despite all the noise around tax credit boosts on the Street.”
Tesla will replace an S&P 500 company to be named later, as it gets closer to the rebalancing, S&P Indices said.
Tesla in July reported its fourth straight GAAP profit, staying in the black in its second quarter despite pandemic-related factory shutdowns.
It went on to report a third-quarter profit as well, but the index inclusion remained elusive.
Tesla shares have quintupled this year, hitting more than 30 record closes in the process, compared with gains around 12% for the S&P. The run prompted a 5-to-1 stock split in late August.
