Elon Musk, founder of SpaceX and chief executive officer of Tesla Inc., will arrive at the Axel Springer Award ceremony in Berlin, Germany on Tuesday, December 1, 2020.
Liesa Johannssen-Koppitz | Bloomberg | Getty Images
Shooting of Tesla’s S&P 500 will be officially finalized during trading Monday opening.
The electric car manufacturer is weighted 1.69% in the index, the fifth largest. It will become the sixth largest company in the large-cap benchmark when Alphabet’s share classes are added together.
The historic addition to the S&P 500 was a bow to Tesla’s excellent 2020. The Elon Musk-led company has delivered five consecutive profitable quarters amid increased demand for electric vehicles. Tesla shares are up more than 730% this year, bringing the company’s market cap to over $ 658 billion. (S&P Dow Jones uses float-adjusted market value instead of the outright number.)
Tesla’s entry is the largest ever for the influential stock index, and arguably the most dramatic.
Investors, including passive fund managers and active managers using the S&P 500 as a benchmark, rushed to Tesla stock in the latest run-up, pushing the stock up nearly 6% on Friday to close at a record high of $ 695 per share. . More than 200 million Tesla shares changed hands during that one session, more than a quadruple of the 30-day average trading volume.
Trading at 186 times its expected earnings, Tesla is also one of the most expensive companies to ever join the S&P 500. However, the impact on the benchmark’s valuation turned out to be smaller than many expected. According to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, the S&P 500’s price-earnings ratio will increase from 22.3 to 22.6 in 2021.
Meanwhile, since Tesla is not paying a dividend, the S&P 500’s dividend yield will drop from 1.56% to 1.53%, Silverblatt said.
In terms of the performance of the S&P 500, the fast-growing stock could potentially move the needle. For every $ 11.11 Tesla move, the S&P 500 changes 1 point, according to the index analyst.
Goldman Sachs previously estimated that the total return of the S&P 500 would have increased by 2 percentage points had Tesla had a share for the entire year. The S&P 500 so far in 2020 is up 14.8%.
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