(Reuters) - Shares of electric carmaker Tesla were down ahead of their debut on the S&P 500 on Monday, as worries over a fast-spreading new coronavirus strain in Britain weighed on markets.
Tesla's shares were recently down around 4% in pre-market trading after closing at a record high of $695 on Friday. Futures for the S&P 500 were down around 1.5%.
The company, headed by billionaire Elon Musk, will become the most valuable ever admitted to Wall Street's main benchmark and will account for 1.69% of the index, according to S&P Dow Jones Indices' analyst Howard Silverblatt. The shares have surged some 70% since mid-November, when Tesla's debut in the S&P 500 was announced https://www.spglobal.com/spdji/en/media-center/news-announcements/#indexNews, and have soared 700% so far in 2020.
Tesla's addition to the S&P 500 led index-tracking funds to buy $90.3 billion of shares by the end of Friday'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&P's 2021 price/earnings ratio will rise to 22.6 from 22.3.
Silverblatt added that the dividend yield for the S&P after Tesla's inclusion would fall to 1.53% from 1.56%.
California-based Tesla'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.
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 Tesla'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 Noel Randewich, Lewis Krauskopf and Ira Iosebashvili; Editing by Daniel Wallis and Steve Orlofsky)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU