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BENGALURU (REUTERS) – Tesla shares rose 4 percent in extended trading on Monday (Nov. 30) after S&P Dow Jones Indices said it would add one of Wall Street’s most valuable companies to the S&P 500 index from a time on December 21.
Adding Elon Musk’s Tesla to Wall Street’s most followed benchmark will force index funds to buy his shares worth about $ 73 billion (S $ 97.8 billion), S&P Dow Jones Indices said.
Shares of the electric car maker have risen more than 40 percent since Nov. 16, when it was announced that Tesla would join the index.
At the time, S&P Dow Jones Indices said it would consult with investors about the possibility of adding Tesla in two tranches a week apart to make the addition easier for index funds to handle.
“In its decision, S&P DJI considered the wide range of responses it received, as well as, among other factors, Tesla’s expected liquidity and the market’s ability to accommodate significant trading volumes on this date,” S&P Dow Jones Indices said at a report. press statement.
With a market value of about $ 550 billion, Tesla will be among the most valuable companies ever added to the index. Tesla will account for a little over 1% of the S&P 500.
With an increase of around 600 percent in 2020, the California-based automaker has become the world’s most valuable auto company, by far, despite production being a fraction of rivals like Toyota Motor, Volkswagen and General Motors.
A highly successful quarterly report in July removed a major profitability hurdle that had prevented Tesla from being listed on the S&P 500.
About a fifth of Tesla’s shares are held by Musk, the CEO, and other insiders. Since the S&P 500 is weighted by the number of company stocks actually available on the stock market, Tesla’s influence within the benchmark will decline slightly, placing it in seventh place, currently held by Johnson & Johnson.
S&P Dow Jones said it would announce on December 11 which company would replace Tesla on the S&P 500.
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