Tesla Inc’s shares were up by more than 10% at the end of the trading day on Monday, after SP Dow Jones Indices, the owner of the SP 500 index, announced that the US electric car-maker would join the index.
SP Dow Jones said that it would announce at a later date the name of the company that would be replaced by Tesla on the index.
Tesla’s addition to the index will be effective from December 21.
SP Dow Jones Indices said that it was seeking feedback on whether to add Tesla’s entire market capitalization weight at once, or add the weight in two tranches on December 14 and 21.
The owner of the index of the US’ 500 largest companies said that Tesla will be one of the largest additions to the SP in the last decade, according to its market capitalization.
The company, owned by tech billionaire Elon Musk, is currently valued at about $387 billion (€326 billion) and is expected to generate one of the largest funding trades in the history of the SP 500.
The surprise announcement by SP Dow Jones follows a snub of Tesla back in September.
At the time, the company was expected to join the index after posting four consecutive quarters of profit — the requirement for inclusion, which for years had eluded the investment-heavy carmaker with low sales and production volumes.
Tesla reported a fifth consecutive quarter of profit in October when it recorded a profit of $331 million in the third quarter of 2020. This fifth quarter is believed to have paved the way for Tesla’s inclusion to the SP 500.
am/rs (dpa, AP)