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Why is Tesla under the spotlight?

  • November 20, 2020 08:07 PM AEDT
  • Team Kalkine

Finally, the bellwether of the electric car space, Tesla is all set to constitute the broader market index S&P 500. The past few days have been eventful for the Billionaire Elon Musk as his space company, SpaceX launched four astronauts. SpaceX has become the first private company to achieve this feat with NASA. Now, electric car maker, Tesla has been named for the inclusion in S&P500, the premier stock market index of the US.

Gold MTF non-AMP

Are there any challenges with the addition of the world’s biggest carmaker in the S&P 500?

Tesla’s mammoth valuation of $387 billion would make it one of the highest weighted companies in the index. The company is so large that S&P Dow Jones Indices, which oversees the index, is also considering to split the stock addition in the index and complete the process in two tranches.

* How has the stock performed after the news broke out on Tuesday?

This latest development with Tesla has skyrocketed its share price by more than 8%, adding more than $40 billion of market cap in a day. However, at the peak of the day the stock was up by more than 13% on Tuesday. The excess demand of the shares has also been generated on hopes regarding the mandatory buying of Tesla’s shares by index funds and ETFs to manage their index portfolios, after the index rebalancing on 21st December 2020.

 


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