Tesla is set to join the S&P 500 Index in December this year, according to an announcement from S&P Global.
The announcement on Monday follows months of speculation that the electric car manufacturer would be added to the index, with Tesla only narrowly failing to make the cut during the index’s quarterly rebalancing in early September. The decision is a historic milestone for Elon Musk’s company, and will will greatly broaden its investor base as index managers buy the stock. Tesla shares were up more than 10% on the back of the news.
Tesla has a market cap of nearly $387 billion, and is now valued at more than Coca-Cola and Disney. It will immediately be one of the index’s most influential members on joining.
“Tesla will be one of the largest weight additions to the S&P 500 in the last decade, and consequently will generate one of the largest funding trades in S&P 500 history,” S&P Dow Jones Indices said.
To be eligible to join the S&P 500, a company must be based in the United States and pass stringent tests on market capitalization, liquidity and earnings. In excess of $11.2 trillion in assets are benchmarked to the S&P 500, according to S&P Global, including $4.6 trillion in indexed funds.
Tesla’s addition to the index will see an existing company replaced, information about which company will be removed from the index will be available at a later date, S&P Global says. Prior to its addition, the index committee will also consider whether Tesla should be added in a single step or a phased approach.