(Adds analyst comments, premarket share move)
Dec 21 (Reuters) – Tesla Inc will on Monday make its much anticipated debut into the benchmark S&P 500 index , after rising to a record high on Friday in a frantic day of trading.
The company, headed by billionaire Elon Musk, will become the most valuable ever admitted to Wall Streetâ€™s main benchmark and will account for 1.69% of the index, according to S&P Dow Jones Indicesâ€™ analyst Howard Silverblatt.
The shares have surged some 70% since mid-November, when Tesla’s debut in the S&P 500 was announced here, and have soared 700% so far in 2020.
Teslaâ€™s addition to the S&P 500 meant index-tracking funds bought $90.3 billion of shares by the end of Fridayâ€™s session so that their portfolios reflected the index, according to Silverblatt.
The change is effective prior to the open of trading on Monday, S&P said earlier in December, and Tesla is replacing Apartment Investment and Management Co.
Silverblatt said that for every $11.11 Tesla moves, the S&P 500 changes 1 point, while the S&Pâ€™s 2021 price/earnings ratio will rise from 22.3 to 22.6.
Tesla shares were down 3.7% in trading before the bell on Monday, amid a broader weakness in the market, after a near 12% surge in the last two trading days.
â€œAll the buying was done on Friday,â€ said Keith Temperton, a sales trader at Forte Securities. â€œThe news is done now … the question now is what next.â€
California-based Teslaâ€™s stock surge has put its market value at about $660 billion, making it the sixth most valuable publicly listed U.S. company with many investors viewing it as wildly overvalued.
â€œIn terms of valuations, Tesla is a stock that ranks in the higher extremes and we have to accept that this is not a company that is valued as an automotive company as it could end up becoming something very different in the future,â€ said Andrea Cicione, head of strategy at TS Lombard.
Tesla is by far the most traded stock by value on Wall Street, with $18 billion worth of its shares exchanged on average in each session over the past 12 months, easily beating Apple, in second place with average daily trades of $14 billion, according to Refinitiv.
About a fifth of Teslaâ€™s shares are closely held by Musk, the chief executive, and other insiders.
Tesla was not immediately available for comment.
Reporting by Megan Davies; Additional reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Daniel Wallis and Anil Dâ€™Silva