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Tesla's S&P 500 Inclusion Could Move Elon Musk Up Billionaire Ladder

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Tesla's S&P 500 Inclusion Could Move Elon Musk Up Billionaire Ladder

The announcement that Tesla would be included in the S&P 500 sent the electric vehicle stock higher Monday night and Tuesday. The move is helping to increase the sizable wealth of Tesla CEO Elon Musk.

What Happened: The S&P 500 announced that Tesla Inc. (NASDAQ: TSLA) will be included in the S&P 500 Index for the first time.

The move sent shares of Tesla up 14% in after-hours trading Monday.

The designation increases Musk's wealth by $15 billion, according to Business Insider,. This jump would place Musk ahead of Facebook Inc (NASDAQ: FB) CEO Mark Zuckerberg for the title of world’s third-richest person.

Bloomberg reported Musk’s wealth at $117 billion. Musk ranks first among Bloomberg Billionaires Index’s 500 billionaires, with a $90-billion gain in wealth this year.

Musk owns 21% of Tesla stock and has the opportunity to own more via a 2018 compensation plan tied to stock performance and financials.

Related Link: 3 ETFs For Tesla's S&P 500 Addition

Why It’s Important: The inclusion in the S&P 500 is significant for Tesla because it will force funds and ETFs tied to the index to accumulate shares of the electric vehicle company.

The large amount of stock needed to complete this move could cause shares of Tesla to trade much higher in the coming months.

A move higher in Tesla shares could also help Musk earn more, as it increases the automaker's market cap.

Musk’s 2018 compensation plan is tied to Tesla's market cap, annualized EBITDA and annual revenue.

Musk hit a $3-billion potential payout by reaching the $250-billion market capitalization milestone over six months.

The increase in Tesla's stock price has put the market cap above $350 billion, giving Musk a better opportunity to hit the next two tranches of his compensation plan. 

Each tranche unlocks 8.44 million options to buy Tesla shares at $70.

TSLA Price Action: Shares of Tesla were trading 8.39% higher at $478.68 at last check Wednesday. 

 

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