Tesla finally enters the S&P 500 next month, an event Goldman Sachs says could spark an $8 billion rally for the electric vehicle wunderstock.
News of its S&P 500 nod has already pushed Tesla’s share price up 22% to eclipse the index’s top performers CARR and ETSY by more than 200%.
Indeed, if Tesla was in the S&P 500 today, it would be the index’s best performing stock this year — by far.
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“They’re almost turning the S&P 500 into more of a momentum index,” Apriem Advisors’ Benjamin Lau, whose firm manages $850 million worth of assets, told Bloomberg.
“I’m more worried about how it affects our index funds and passive holdings than anything else.”
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Tesla is bigger than Visa, but not quite as big as Berkshire
Lau has a point. Tesla is already one of the biggest companies in the world. If Tesla was part of the S&P 500 today, it would be the index’s seventh biggest company, ahead of industry giants Visa, Walmart, Johnson & Johnson, and JPMorgan Chase.
The only companies more valuable would be Warren Buffett’s Berkshire Hathaway, Facebook, Alphabet, Amazon, Microsoft, and Apple.
[Read: Watch Tesla’s meteoric rise — set to techno-remixed Elon Musk tweets]
Considering Tesla’s newly-found girth, any share price reversal could drag market-wide indexes like the S&P 500 down with it.
After all, stock that goes up can come down just as quickly.
Whatever happens, Tesla’s addition to the S&P 500 gives a degree of validation to investors who’ve already bought in, and offers incentive for the world’s largest funds to jump in — even as the stock trades at new record highs.
Just 4.20 weeks to go…
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