When Will Tesla Be Added to the S&P 500?

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Nov. 23 2020, Updated 8:46 a.m. ET

Tesla is officially set to join the S&P 500 Index. Last week, S&P Dow Jones Indices said that Tesla will be added to the major market index on Dec. 21. The planned inclusion already lifted the share price through recent trading sessions. In the last week, Tesla stock was up about 20 percent.

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With a market capitalization of about $464 billion, Tesla will enter the benchmark index as one of the 10 most valuable companies on the index. The news follows months of uncertainty about when the electric car manufacturer would join the index.

tesla and the sandp
Source: istock
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Is Tesla in the S&P 500?

Currently, Tesla isn’t included in the S&P 500 Index. In July, the company became eligible to join the index after posting its fourth consecutive quarterly net profit. The S&P 500 Index needs members to be located in the U.S., trade on the NYSE, Nasdaq, or Cboe, have a market capitalization of at least $8.2 billion, and report four consecutive quarters of net profit on a GAAP basis.

When will Tesla join the S&P 500?

Tesla is finally joining the S&P 500 Index. The electric-auto maker is expected to join the S&P 500 Index on Dec. 21. Being able to join the index was a long-awaited move and a win for Tesla bulls.

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Last month, Tesla reported its fifth consecutive quarterly net profit. In the September ended quarter, Tesla reported a net profit of $331 million compared to $143 million in the same quarter a year ago. In the third quarter, Tesla delivered about 140,000 units, which represented 45 percent growth year-over-year. 

Who will Tesla replace in the S&P 500?

The S&P Dow Jones Indices hasn’t disclosed which company Tesla will replace in the S&P 500 Index. The information will be released at a later date.

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Wedbush on Tesla

Tesla stock was up 1.71 percent in the pre-market trading session as of 7:36 a.m. ET on Monday, Nov. 23. The stock surged after Wedbush Securities analyst Daniel Ives upgraded its target price for the electric car maker. However, the analyst maintained his neutral rating on the stock. In a research note, Ives said that Tesla will likely achieve its target of 1 million car deliveries by 2023 or possibly sooner.

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Ives said that Tesla will likely benefit as electric vehicle adoption grows. The analyst highlighted China as a greenfield EV market opportunity. Ives also thinks that the Biden administration could increase EV tax credits and incentives in the U.S.

Wedbush hikes Tesla’s target price

Ives increased Wedbush's 12-month target price on Tesla stock from $500 to $560. The new target price represents an upside of about 14 percent from the last closing price of $489.61.

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