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Tesla to join S&P 500 in 1 step, triggering $72.7B in required trades


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Tesla to join S&P 500 in 1 step, triggering $72.7B in required trades

Tesla Inc. will be added to the S&P 500 all at once, rather than through a staggered approach, in spite of the electric car company's roughly $538 billion market capitalization, S&P Dow Jones Indices announced late Nov. 30.

Tesla will be added at its full float-adjusted market cap weight effective prior to the open of trading on Dec. 21, when it is scheduled to be listed on the large-cap index, Dow Jones Indices said in a statement. It will be the largest company ever added to the index.

When it announced on Nov. 16 that Tesla would be added to the S&P 500, Dow Jones Indices said it was considering a phased, two-step approach in adding Tesla to the index due to the size of the company’s market cap. It had considered listing Tesla in two steps, on Dec. 14 and Dec. 21.

Dow Jones Indices said it decided to list Tesla in one step after consulting with market participants and considering Tesla's expected liquidity and the market's ability to accommodate significant trading volumes when it is listed Dec. 21.

It said it will name the company Tesla will replace on the S&P 500 on Dec. 11.

Tesla's float-adjusted market value of $437 billion would produce $72.7 billion in required trades for managers of funds tracking the S&P 500 in addition to the normal rebalancing trades of that day, according to Howard Silverblatt, senior index analyst at Dow Jones Indices.

Goldman Sachs had estimated that Tesla is poised for as much as $8 billion in flows from mutual funds when the electric car company is formally listed on the large-cap index.

Tesla's share price has jumped 39% since it was announced that it would be added to the S&P 500. Tesla stock has increased 578% this year and its market cap has jumped 614%.

S&P Dow Jones Indices and S&P Global Market Intelligence are owned by S&P Global Inc.