Tesla has joined Wall Street’s prestigious S&P 500 share index as its sixth-largest member, immediately rubbing shoulders with the likes of Amazon, Apple and Facebook.
Shares in the electric carmaker fell by more than 5% on its debut day on Monday, amid widespread investor concern about the potential impact on global trade of the mutant coronavirus strain identified in the UK.
But its entry into the upper echelons of the US’s flagship stock index, despite never having made an annual profit, racks up another milestone for its billionaire founder, Elon Musk.
Tesla’s shares surged to a record high of $695 on Friday, valuing the company at more than $650bn, less than six months after it overhauled Toyota to become the world’s most valuable carmaker. Ford is valued at about $35bn.
The increase was partly caused by a buying spree linked to the scheduled entry into the S&P 500, because funds that automatically invest in members of the index snapped up about $90bn of stock in readiness.
But the performance also continued a long-term trend that has caused shares of the electric vehicle maker to soar by nearly 700% over the past year.
Tesla is yet to make a profit for a single financial year, although it has racked up successive positive results in quarterly earnings figures.
While some investors have warned it is significantly overvalued, its soaraway share price indicates the majority think it can deliver on its promise.
Backers believe the company’s technological prowess puts it in pole position to beat traditional automotive firms at securing top spot in the burgeoning electric car market.
Tesla, which faced questions over whether it could avoid a cash crunch only 18 months ago, will account for 1.69% of the S&P 500. For every $11.11 Tesla’s share price moves, the S&P 500 will change by a point.
Musk and other Tesla insiders own about a fifth of its shares.