Tesla will join the S&P 500 in December after being snubbed earlier this year



The Tesla logo is seen on a car in Los Angeles, California, U.S., July 9, 2020.  REUTERS/Lucy Nicholson     TPX IMAGES OF THE DAY
Shares of Tesla spiked by more than 13% on the news.

Tesla will join the S&P 500 on December 21, S&P Dow Jones Indices announced Monday
With a market cap of nearly $400 billion, Tesla is set to join as one of the 10 most valuable companies in the index. 
S&P Global did not say which company Tesla will replace later this year. 
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Tesla will be added to the S&P 500 later this year, S&P Dow Jones Indices announced Monday. 

Tesla will join the exclusive club of companies prior to the open of trading on Monday, December 21. Shares of the electric-vehicle manufacturer jumped more than 13% on the news in after-hours trading. 

The S&P 500, an index of 500 large US companies, is seen as one of the most important gauges of the success of America’s largest publicly-traded firms. It is chosen by the S&P 500 Index Committee, which rebalances the group each quarter. In September, the online marketplace Etsy, robotics company Teradyne, and pharmaceutical developer Catalent joined the index, while Tesla was left out, even though it met the standards required to be added. 

Among other requirements, companies must be based in the US, have a market cap of at least $8.2 billion, be highly liquid, have at least 50% of their shares available to the public, and post four consecutive profitable quarters, a criterion Tesla met in the period ending June 30. 

Tesla joins the index as the world’s most valuable automaker, with a market cap of nearly $400 billion. That places it firmly in the top 10 most valuable firms in the index, alongside Goliaths like Apple, Amazon, and Berkshire Hathaway. 

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Even as the pandemic dealt a major blow to the global auto industry, disrupting manufacturing and supply chains worldwide, Tesla has had one of its best years to date. Last month, the EV maker reported its fifth straight profitable quarter. Tesla also said in October it sold 139,300 cars from July through September, beating its previous quarterly sales record by more than 20,000 vehicles and putting it within spitting distance of its goal to sell 500,000 cars in 2020. Shares of Tesla have more than quadrupled this year.

S&P Global did not specify which of the current 500 firms Tesla would replace, saying that it would make that announcement in a separate release. 

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