Tesla Share Price Rallies 14% In Pre-Market as It Gears to Enter S&P 500 in December

Summary

• Shares of Tesla rocketed as much as 14.12 per cent in the pre-market trades on Tuesday to a high of $466.20
• The inclusion of Tesla share in S&P 500 will be completed before the commencement of trading on 21 December
• The California-headquartered auto conglomerate, at a share price of $408.50, commands a market capitalisation of approximately $387 billion. 

Shares of Tesla Inc (NASDAQ:TSLA), the California-headquartered auto conglomerate, rallied more than 14 per cent in the pre-market deals on Tuesday, 17 November, after the S&P Global announced that the scrip would be included in the S&P 500 index. According to the official announcement from S&P Dow Jones Indices, the stock of Tesla Inc will be added to the broader index S&P 500 from Monday, 21 December 2020. The inclusion of Tesla share will be completed before the commencement of trading on 21 December. 

S&P Dow Jones Indices has been seeking consultation to determine the inclusion framework due to the large size of addition whether the stock of Tesla should be added all in one go or a two-tranche system of addition should be incorporated. Tesla is going to replace another company, a constituent of the prestigious S&P 500 index. S&P Dow Jones Indices is likely to reveal the details of the stock being removed from the S&P 500 index in a separate announcement.

Tesla share price reaction

Shares of Tesla rocketed as much as 14.12 per cent in the pre-market trades on Tuesday to a high of $466.20 from the previous closing price of $408.50. Despite the presence of a challenging business environment due to the spiralling cases of Covid-19 and repercussions following the pandemic, the stock of Tesla has been on a raging run in the present calendar year.

Tesla defying Covid-19 worries

According to the historical data available with the Nasdaq, Tesla share price has posted an astonishing return of nearly 465 per cent to-date from the closing low achieved during the market-wide slump, on the back of Covid-19 uncertainty in March this year. The stock of Tesla has amassed a gain of 464.91 per cent to $408.50 (16 November) from the share price level of $72.24 a piece as on 18 March. 

Tesla shares (YTD-performance)

(Source: Thomson Reuters)

Tesla Inc, at a share price of $408.09, commands a market capitalisation of approximately $387 billion. With the present market capitalisation of Tesla, the diversified automobile manufacturer has surpassed the market value of age-old enterprises including Toyota Motor Corporation, Coca-Cola, Procter & Gamble Co, Disney, Exxon Mobil Corporation, UnitedHealth Group, Intel Corporation and JPMorgan Chase & Co.

According to S&P Dow Jones Indices, Tesla Inc is bigger than the 95 per cent other corporations constituting the S&P 500 and is going to be one of the largest-weight inclusions in the history of the index.

Tesla’s key highlights of 2020

• In August, the board of directors of Tesla declared a five-for-one split of the stock following which, all the eligible shareholders on the record as on 21 August, received four additional shares for a unit of Tesla share held in the account.
• Earlier in February this year, Tesla concluded the public offering of shares to the tune of 15.2 million shares (adjusted to corporate actions in the year) and realised net proceeds of $2.31 billion.
• There has been uncertainty in the global financial markets due to the presence of Covid-19 pandemic. According to Tesla, the company has been relatively successful in navigating such impact to date.
• Tesla has produced 329,980 vehicles and delivered as many as 318,980 vehicles, in the nine-month period to 30 September, translating into a sale to manufacturing ratio of 96.67 per cent.
• Tesla has reported a total revenue of $20.79 billion and a net income of $451 million attributable to shareholders in the nine months of FY20.