As Tesla Inc. is all set to enter the S&P 500 on Monday, as market analysts predicted, the company’s shares soared to a record high on Friday on a frantic trading day. Shares swung late in the session between gains and losses before surging in price and volume towards the end of trading. Finally, the shares finished up 6 percent at a high $695 as the markets closed for the day.
The electric-car manufacturer would be by far the biggest corporation to enter the S&P, the most widely followed stock index by market value ever.
Over the last year, electric vehicle manufacturer shares have risen by almost 700 percent, a meteoric increase that has punished short-sellers and transformed it into the most highly regarded automaker in the world. Since inclusion was revealed in November, the inventory has risen 70 percent.
Tesla’s stock surge in California has put its market cap at around $660 billion, making it the sixth most valuable U.S. publicly traded firms, with many investors seeing it as wildly overvalued.
With $18 billion worth of its shares exchanged on average in each session over the past 12 months, Tesla is by far the most traded stock by volume on Wall Street, comfortably beating Apple, second with a daily average turnover of $14 billion.
According to the Bloomberg Billionaires Index, the rise in the Tesla share price pushed the net worth of the company’s chief executive, Elon Musk, up almost $9 billion to $167.3 billion.
This year the 49-year-old entrepreneur has added $139.7 billion, an amount that exceeds the overall net worth of everyone on the planet other than Jeff Bezos, founder of Amazon.com Inc. Bezos, for now with 187.3 billion dollars, tops the income index. Musk and other insiders own about a quarter of Tesla’s shares.
In several electric-vehicle pioneers who have seen their fortunes leap this year, Musk is the most popular, spurring a raft of new entrants. At least fifteen electric vehicle companies have been publicly listed or announced in 2020.
As Tesla is a “volatile stock, some strategists expect the inclusion of Tesla to ripple through the S&P 500 itself.”
However other groups feel that the inclusion of Tesla is unlikely to intensify gyrations in the wider index. Had the stock been included in the S&P 500 over the year, the implied volatility on the benchmark index would have risen by just a small amount.
Actively managed funds that measure their performance against the S&P 500, many of which have so far avoided investing in one of the most divisive stocks on Wall Street, would also be forced to decide whether to buy Tesla.