Dec 21 (Reuters) - Tesla Inc will on Monday make its much anticipated debut into the benchmark S&P 500 index , after rising to a record high on Friday in a frantic day of trading.
The company, headed by billionaire Elon Musk, will become the most valuable ever admitted to Wall Street’s main benchmark and will account for 1.69% of the index, according to S&P Dow Jones Indices’ analyst Howard Silverblatt.
The shares have surged some 70% since mid-November, when Tesla's debut in the S&P 500 was announced and have soared 700% so far in 2020.
Tesla’s addition to the S&P 500 meant index-tracking funds bought $90.3 billion of shares by the end of Friday’s session so that their portfolios reflected the index, according to Silverblatt.
The change is effective prior to the open of trading on Monday, S&P said earlier in December, and Tesla is replacing Apartment Investment and Management Co.
Silverblatt said that for every $11.11 Tesla moves, the S&P 500 changes 1 point, while the S&P’s 2021 price/earnings ratio will rise from 22.3 to 22.6.
Tesla shares were down 3.7% in trading before the bell on Monday, amid a broader weakness in the market, after a near 12% surge in the last two trading days.
“All the buying was done on Friday,” said Keith Temperton, a sales trader at Forte Securities. “The news is done now ... the question now is what next.”
California-based Tesla’s stock surge has put its market value at about $660 billion, making it the sixth most valuable publicly listed U.S. company with many investors viewing it as wildly overvalued.
“In terms of valuations, Tesla is a stock that ranks in the higher extremes and we have to accept that this is not a company that is valued as an automotive company as it could end up becoming something very different in the future,” said Andrea Cicione, head of strategy at TS Lombard.
Tesla is by far the most traded stock by value on Wall Street, with $18 billion worth of its shares exchanged on average in each session over the past 12 months, easily beating Apple, in second place with average daily trades of $14 billion, according to Refinitiv.
About a fifth of Tesla’s shares are closely held by Musk, the chief executive, and other insiders.
Tesla was not immediately available for comment.
Reporting by Megan Davies; Additional reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Daniel Wallis and Anil D’Silva