DISAPPOINTED: Elon Musk is probably disappointed that he did not get a place in the S&P 500. Foto: Bloomberg
Elon Musk and Tesla had a dream of becoming part of the S&P 500 index, which is an index that follows the 500 largest companies. About $ 4.4 trillion is invested in index funds that follow the S&P 500, which would have contributed to more buyers of the Tesla stock.
It was recently announced that the space went to Etsy and not Tesla, according to Reuters. That sends the Tesla stock down 6.5 percent in pre-trade on Wall Street, while Etsy climbs 5.7 percent. Although Tesla’s market value is more than 20 times that of Etsys, other variables also come into play.
In July, Tesla managed to present a positive result for the fourth quarter in a row, which was a great demand to become part of the S&P 500.
Although it is a requirement to deliver a positive result for four quarters in a row, one is not guaranteed to get a place. Senior index analyst Howard Silverblatt points out that companies must also fit into the algorithm, represent the market, have liquidity and size.
“The market is constantly changing, and we have to reflect that in our indices,” explains Silverblatt, who did not want to comment on why Tesla did not get the place, according to Reuters.
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