People & Money

Tesla’s Plan to Join S&P 500 Lifts Investors’ Hope

Electric car-maker Tesla is on track to join the U.S. benchmark S&P 500 stock index on Monday, offering several millions of investors hopes of higher investment returns.

Pundits believe the financial milestone is the culmination of a flurry of good news for billionaire Elon Musk’s company this year.

The coronavirus outbreak has not been fierce enough to significantly curb the demand for its cars, given Tesla’s notable resilience this year.

Yet, letting Tesla into the S&P league could mean investors would be riding on choppier waters in funds that track the index.

Tesla has seen some upsets since it launched in California 17 years ago. It has come close to bankruptcy, with Musk clashing with authorities on issues ranging from self-driving technology to coronavirus lockdowns.

Also Read: Younger Workers Fleeing Oil Industry, Some May Work For Elon Musk

Musk has been a subject of controversy with defamation cases and using drugs live on a web chat show.

Tesla’s shares have seen high and low moments, even though they have been largely bullish this year, appreciating by over 700%, as the company seemed to have put its manufacturing and financial difficulties behind.

They climbed by nearly 6% to a new record last Friday night, as funds tracking S&P purchased stock valued at $80 billion (£60 billion) ahead of the company’s entry to the flagship index.

With a market capitalisation topping $600 billion, Tesla is now the most valuable carmaker in the world and the sixth most valuable company on Wall Street, coming behind heavyweight tech firms like Amazon and Apple.

Also Read: Elon Musk to Become World’s Third Richest Man as Tesla Shares Surge

The quantum leap in Tesla’s share price this year has made Musk one of the wealthiest persons in the globe, with a fortune in the region of $150 billion, behind only Amazon’s Jeff Bezos, according to Forbes.

Following months of speculation, index manager S&P Dow Jones Indices announced the decision to join S&P in November, after Tesla posted five successive quarterly profits.

Tesla’s shares have risen by approximately 60 percent since then.

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