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Tesla Inc’s (NASDAQ:TSLA) inclusion in the S&P 500 index could help it catch up with the Nasdaq 100, according to analysts.
What Happened: Brian Freitas, an analyst at Smartkarma, told Bloomberg that Tesla’s addition “will help the S&P Index to reduce its lag versus other gauges such as Nasdaq 100 Index.”
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Buying from funds that track the S&P 500 could lead to a bout of share buying. Freitas estimates passive money would need to purchase $58 billion in stocks.
Wedbush Securities analyst Daniel Ives reportedly called the inclusion of Tesla “a key positive for shares and indexing purposes.”
The inclusion of the Elon Musk-led automaker in the index could help boost stocks already enjoying a boost from news surrounding the COVID-19 vaccine and election results, Bloomberg noted.
Why It Matters: While the S&P 500 is up nearly 12% year-to-date, the Nasdaq 100 has run up almost 38% driven higher by the 388% increase in Tesla’s share price.
The inclusion of Tesla in the S&P 500 comes after months and months of speculation and will take effect before the opening of trade on Dec. 21.
The weightage of the automaker means that a special two-step entry is needed, Bloomberg noted.
The stock is likely to be among the top 10 largest stocks on the index. The company that will be displaced as a result of Tesla's entry is yet to be determined.
Price Action: Tesla shares shot up 13.19% to $461.92 in the after-hours session on Monday after closing 0.1% lower.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.