Tesla TSLA Draws Massive Trade Volume as it Prepares for S&P 500 Inclusion

Tesla's (NASDAQ: TSLA) impressive growth continues with renewed vigor. The company's scheduled S&P 500 listing on December 21 is expected to be preceded by a major deal in which Tesla shares are bought for $80 billion.

Tesla will become the most valuable company ever included in the S&P 500, and will account for 1% of the total index. As of this writing, the price was $673 per share. The company had a market capitalization of nearly $638 billion. Since the beginning of the year, shares have risen by about 700%.


Today, on the last day of trading before inclusion in the index, Tesla shares were the most actively traded on the American stock exchanges, with about 1.9 million shares changing hands by 9:00 a.m. ET, Reuters reports.

Tesla's addition to the S&P 500 forced index-tracking funds to buy over $80 billion worth of Tesla stock by the end of Friday's session to ensure their portfolios correctly reflect the index according to S&P Dow Jones Indices. These funds will also have to simultaneously sell shares of other S&P 500 participants for the same amount.

“Index managers will need to sell a large position across the other S&P 500 constituents in order to fund the addition of TSLA, which could lead to substantial impact across the entire index,” Virtu ITG Canada's head of index research, Ivan Cajic, wrote in a report this week.

Tesla shares are the most highly traded shares on Wall Street. Over the course of the year, Tesla shares were traded for about $18 billion daily. In comparison, Apple's average intraday trading volume was $14 billion.

© 2020, Eva Fox. All rights reserved.

Follow @EvaFoxU

_____________________________

We appreciate your readership! Please share your thoughts in the comment section below.

Legal Disclaimer --

This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Eva Fox, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.