Tesla CEO Elon Musk can celebrate the company’s expected addition to the S&P 500 index.

Tesla stock surged in after-hours trading Monday after it was announced the company would be added to the closely watched S&P 500 index, opening Tuesday 52 points higher than Monday’s closing price.

Now the world’s most valuable automaker, Tesla had been snubbed when it was not added to the index in September as had been expected. The development led to Tesla shares jumping as much as 13% overnight and could push the stock even higher as many investment funds specifically focus on companies in key indices.

The stock closed Monday at $408.09, then opened at $460.17. Since then it’s given back some of the gains, falling into the upper $440 range in mid-morning trading. The price, which is still more than a 10% jump compared with the previous day’s closing price, is still below its 52-week high of $502.49. Tesla stock has more than quadrupled in price this year – the shares undergoing a five-for-one split – and becomes the most valuable company ever to join the S&P 500 with a market capitalization of nearly $387 billion. It’s since jumped to more than $420 billion — a number certain to bring a smile to CEO Elon Musk’s face.

(Now worth more than all Japanese automakers, but Toyota’s CEO isn’t impressed.)

Tesla’s stock price jumped after the announcement. (Chart courtesy of Google Finance.)

Tesla only this year became eligible to be considered for the S&P 500 when the company reported its fourth consecutive quarterly profit after years of heavy losses. It has since delivered a third-quarter profit on $8.8 billion in revenues, but Musk recently revealed the company came within a month of running out of cash during the run-up to the Tesla Model 3 launch in July 2017.

“This is another major feather in the cap for Tesla bulls joining the S&P 500,” wrote Dan Ives, an analyst at research firm Wedbush Securities, who has a neutral rating on the stock. “It speaks to the sustained profit trajectory that Tesla is now finally getting into this elusive club after much noise on the Street.”

Tesla shares have seen significant volatility since the company went public on June 29, 2010. That reflects a number of factors, and the investment community has given the automaker a valuation far higher than that of key competitors. During a recent earnings call with analysts, General Motors CEO Mary Barra made it clear she is hoping to drive up that company’s stock price as it also shifts emphasis from conventional to electric vehicles.

(Despite record Q3 results, Tesla stock only gets small bump.)

Many observers expected Tesla to be added to the closely followed index in September. There was no explanation as to why that didn’t happen from the committee that determines what companies are included in the S&P 500. The group meets every quarter though, CNBC pointed out, stocks can be added and removed at any time, and the exact process is “tightly guarded.”

Tesla is shipping Model 3 sedans produced at its Shanghai plant to Europe until Giga Berlin is up and running.

In a statement, S&P officials noted that, “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.”

While Tesla shares are up substantially from the beginning of the year, the stock hovered in the $400 to $440 per share range in recent weeks split-adjusted high of $502.49. It closed on Monday at $408.09, a 0.10% loss. It bounced as high as $466.20 after the S&P news was announced.

(Tesla gets into the tequila business, blows out first round in hours.)

Whether that rally remains is uncertain, “Stock performance for companies added to the index between 1973 and 2018 usually fell behind the S&P a year after inclusion, according to Ned Davis Research,” noted the Wall Street Journal which quoted long-time Tesla skeptic David Trainer, chief executive of investment research firm New Constructs, warning that the index “is making a big mistake” that could trigger a big sell-off of stocks in the S&P 500.

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