On Monday evening, Tesla (TSLA) was finally admitted into the S&P 500 index. This marks another milestone for the American EV company, which was previously rejected by the index committee in September. For most Analysts, the inclusion of Tesla in the S&P was overdue, taking into account the firm's astonishing market capitalization of over $400 billion and it’s third quarter results reporting new records in free cash flow and operating income.
In fact, Tesla will be in the top ten most valuable firms of the index, when it officially joins on December 21. The stock rose in anticipation of the buying which will take place as portfolios which mimic the index are adjusted to include the company.
Since the S&P is weighted according to market capitalization, passively managed funds that track the index are expected to have to buy about $50 billion in Tesla, and sell other stocks to make room for it. Therefore, the index provider is considering splitting up the inclusion process into two steps.