S&P Dow Jones Indices said it will add Tesla to the Standard and Poor’s (S&P) 500 at its full float-adjusted market capitalization weight effective prior to the open of trading on December 21.
Ahead of the determination, S&P considered the expected liquidity of Tesla and the market’s ability to accommodate significant trading volumes. In the end it picked the simplest solution: basically absorbing the entire company in one go.
The reason for S&P’s quandary is that with a market cap of $555BN, or more than Berkshire Hathaway, the moment Tesla is included in the S&P, it would become the 6th largest company in the index, only behind the FAAMGs or Facebook, Apple, Amazon and Google.
S&P also said that after the market close on December 11, pro-forma files will be distributed, and a press release will be published announcing which company Tesla will replace in the S&P 500.
Considering that the S&P inclusion is expected to result in some $11 billion in mandatory purchases it is safe to say that TSLA has gotten more than a fair share of upside, with the stock surging by $200 since the S&P announcement, an addition of more than $200 billion to its insane market cap.