Shares of Tesla soared about 13.2% in Monday’s extended market trading after the electric vehicle maker announced that it will be added to the S&P 500 Index.
Tesla (TSLA) said that it will officially join the benchmark index prior to the trading on December 21. The inclusion will place it among the most valuable companies on the S&P 500.
In a statement, Tesla said, “Due to the large size of the addition, S&P Dow Jones Indices is seeking feedback through a consultation to the investment community to determine if Tesla should be added all at once on the rebalance effective date or in two separate tranches ending on the rebalance effective date.” (See TSLA stock analysis on TipRanks)
Following the company’s announcement, Wedbush analyst Daniel Ives wrote in a note to investors that “Clearly this is a key positive for shares and indexing purposes and ultimately removes another question mark around the Tesla story going forward.” Ives maintained a Buy rating on the stock with a price target of $500 (22.5% upside potential).
Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 10 Holds, 9 Buys and 9 Sells. Given the year-to-date share price rally of 388%, the average price target stands at $382.21 implying downside potential of about 6.3% to current levels.