To be eligible to join the S&P 500, a company must be based in the United States, have a market capitalization of at least $8.2 billion, be highly liquid, and have at least 50% of its shares available to the public. Its most recent quarter’s earnings and the sum of its trailing four consecutive quarters’ earnings must be positive, as well.
Tesla will replace an S&P 500 company, information about which company S&P Global says will be released at a later date. The index committee says it’s also considering whether Tesla should be added all at once or in two separate tranches.
“Clearly this is a key positive for shares and indexing purposes and ultimately removes another question mark around the Tesla story going forward,” Wedbush analysts Daniel Ives and Strecker Backe wrote in a note to clients.
Tesla shares were up more than 10% upon the news, according to Refinitiv.
— CNN’s Annalyn Kurtz and Clare Duffy contributed to this report.