On Monday, December 21, Tesla (NASDAQ: TSLA) reached a major milestone as the company's stock debuted in the S&P 500. Tesla has been making a profit now for five consecutive quarters, qualifying it to enter the index. Achieving this milestone was made possible by the hard work of Elon Musk and the incredibly talented Tesla team. Also, their efforts and work results were what made millions of retail investors believe in the company.
In order for a company to enter the exclusive stock index, it must have high liquidity, have at least 10% of its shares in public circulation, and have four consecutive quarters of profitability. The company must also have a market capitalization of at least $8.2 billion. Many years of hard work have resulted in Tesla more than meeting all the requirements to be included in the prestigious U.S. index. Tesla accounts for 1.69% of the S&P 500's weight as of today.
At the beginning of its journey, Tesla barely managed to avoid bankruptcy, which required enormous efforts from its CEO and the team. Nevertheless, a confident path with expertly guided direction—and a desire to achieve high goals—not only brought the company out of a difficult financial situation, but also raised it to new heights.
Thanks to everyone who worked so hard to make Tesla successful. My heart goes out to you.— Elon Musk (@elonmusk) December 21, 2020
Investors feel justified as the stock continues to rally, and the company has joined the S&P 500. There are plenty of investors who placed their trust in the company years ago, and now are receiving generous rewards.
Tesmanian founder Vincent Yu believes in the company mission, as an early long term investor. “I feel like S&P needs Tesla more than Tesla needs S&P,” he said in an interview with the Wall Street Journal. He invested in Tesla stock in 2013, and has since increased his holdings, closing positions at tech giants like Amazon and Apple.
Tesla is the world's most valuable automaker with tremendous growth potential. In fact, it costs almost as much as the next seven automakers combined. Tesla is also the sixth-largest company in the S&P when combining both of Alphabet's share classes, trailing Apple, Amazon, Microsoft, and Facebook. Tesla is the most valuable company ever to be part of the S&P 500.
© 2020, Eva Fox. All rights reserved.
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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.
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.