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Tesla to become 5th largest weighting index on S&P 500 list
Tesla Inc. is set to make its much anticipated debut into the benchmark S&P 500 Index on Monday. The electric car maker will become one of the most valuable companies ever admitted to Wall Street’s default benchmark and will account for 1.69% of the index, according to S&P Dow Jones Indices’ analyst Howard Silverblatt.
For every $11.11 Tesla moves, the S&P 500 changes 1 point. (The S&P’s price/earnings ratio will rise from 22.3 to 22.6 in 2021.)
The California-based company’s stock surge has put it on top of the list of world’s most valuable companies with a market capitalization of about $600 billion. It is currently the sixth most valuable publicly listed company in the U.S. The surge is so wild that even chief executive Elon Musk calls the company’s market capitalization grossly overvalued.
Tesla’s shares have surged 70 percent since mid-November, when Tesla’s debut in the prestigious S&P 500 was announced.
Tesla’s S&P 500 Index debut suggests that the electric-car maker has overcome problems that plagued it until a year ago. Until the middle of last year, Tesla’s losses were piling up, sales figures weren’t impressive to cover expenses or pay off looming debts. The automaker lost more than $1 billion year after a year and experienced struggle to raise capital.
The situation got to a point where an influential Wall Street analyst raised the possibility that the automaker would have to be restructured financially.
Tesla is currently the most publicly traded stock on the Wall Street. According to Refinitiv, about $18 billion worth of Tesla shares were exchanged on average during each session over the past year, beating Apple, in the second place with average daily trades of $14 billion.
About a fifth of Tesla’s shares are closely held by Musk, the company’s chief executive, and other insiders.
(Image Credit: Tesla)