On Monday, December 28, Tesla Inc headed by billionaire Elon Musk will become one of the most valuable companies in the S&P 500, according to Reuters. Analysts estimate that the carmaker will account for over 1% of the global index.
Experts are confident that Tesla's addition to the S&P 500 will force index-tracking funds to buy the electric car manufacturer's shares worth more than $80 billion. This is necessary to maintain the balance in the index and correctly form investment portfolios. At the same time, these funds will have to sell other S&P 500 constituents’ shares worth the same amount.
However, the fact whether large funds will invest in Tesla or not remains in question. Some investors consider Elon Musk a successful entrepreneur, while others hold opposite views. The latter note that Tesla has failed to hit production targets. Besides, they believe that corporate management is at risk after Musk stepped down as board chairman in 2018.
Since the beginning of this year, Tesla's shares have skyrocketed by a dizzying 700%, and its market value has topped $600 billion. By the end of 2020, the carmaker has become the sixth most valuable company in the US market.
This dramatic surge in shares made it the world's most expensive automaker, experts say. In mid-November 2020, its management announced that the company would join the S&P 500. Against this background, the electric car manufacturer's shares soared by about 60%, although many consider them to be overvalued.
Tesla is by far the most traded stock by value on Wall Street. Over the past year, Tesla has averaged over $18 billion a day in trades. Notably, Apple occupies the second position on this list, with the trading volume of about $14 billion a session, according to Refinitiv data.