Tesla Nears Half a Trillion Mark After Soaring 525% This Year

Tesla Inc. is smashing through records as its impending addition to the S&P 500 Index has sparked a buying frenzy among investors, pushing the company’s market valuation close to the $500 billion mark for the first time.

Shares of the electric vehicle company have soared this year, rising nearly 525%, with gains accelerating over the past week after S&P Dow Jones Indices last Monday said Tesla will be added to the benchmark. The stock surge helped co-founder Elon Musk add $100.3 billion to his net worth this year and overtake Bill Gates to become the world’s second-richest person.

Read more: Musk Overtakes Gates to Grab World’s Second-Richest Ranking

Tesla shares rose over 5% in premarket trading on Tuesday after closing at a record high on Monday — taking its market capitalization to about $495 billion as of yesterday.

If these gains hold in regular trade, the company would be valued at about $519 billion before the end of the session. Exceeding the $500 billion valuation will bring true a prediction from Musk, who is said to have made it 18 months ago in a call with investors.

With Tesla set to join the index on Dec. 21, money managers and investors who closely track the S&P 500 will now have to buy the stock in order to accurately mirror the gauge. Goldman Sachs Group Inc. has said Tesla’s inclusion could result in $8 billion of demand from active U.S. large-cap mutual funds.

Tesla’s ascencion and entrance into the group of blue-chip investments is also good news for the broader sector. Nio Inc., Workhorse Group Inc., Nikola Corp., Lordstown Motors Corp., XPeng Inc., Li Auto Inc. and Ayro Inc. have also rallied and some are now trading at new record highs.

Electric-vehicle makers and other related companies across the world have also enjoyed frenzied buying on optimism the auto sector will be dominated by electric-powered cars in the decades ahead. That combined with high valuations for Tesla is pushing investors to lesser known names that can benefit from the sector’s growth opportunities, but with a smaller share price.

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