Tesla (NASDAQ: TSLA) stock price grew almost 13% in post-market trading after the S&P 500 committee announced that they are planning to add electric vehicle maker to the broader market index by December 21.
Bulls applauded the news as they have long been waiting for this event. However, S&P Dow Jones said in a news release that they are waiting for the feedback to determine if electric vehicle maker should be added at once or in two separate transactions.
Elon Musk’s Tesla is now eligible for inclusion because it has a market cap greater than $8.2 billion, with a high liquidity position, and has a public float of more than 50% of its outstanding shares. Most importantly, Tesla has generated profits in the past five consecutive quarters, exceeding the criteria for profits in the trailing four quarters.
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Previously, the committee that is reviewing companies’ performance on a quarterly basis, refused to add Tesla to the S&P 500 because of its bigger size. The shares of the electric car marker grew almost 380% so far this year.
Bulls applauded Tesla stock addition to the S&P 500
Baird said Tesla’s inclusion in the S&P 500 could mark the largest-ever addition to the index. Bulls believe Tesla’s addition could be among the biggest catalyst for future stock performance.
“This is another major feather in the cap for Tesla bulls joining the S&P 500,” said Dan Ives, an analyst at research firm Wedbush Securities who has a neutral rating on the stock. It speaks to the sustained profit trajectory that Tesla is now finally getting into this elusive club after much noise on the Street.”
Wedbush analyst has provided a price target of $500 amid its strong production and operational efficiencies. Tesla plans to deliver 500K vehicles this year despite pandemic related to challenges and supply chain disruptions.