Tesla shares skyrocket ahead of S&P 500 debut

Shares in Elon Musk’s US-based electric car maker Tesla grew nearly 3 percent last day and have now increased 40 percent since November 16, when it was announced that Tesla will join the S&P 500 in December.

Investors rushed to buy shares ahead of index funds that will be forced to acquire over $50 billion of its shares.

Tesla was already the US stock market’s most traded companies by average daily value, but trading has surged in recent sessions, along with Tesla’s stock price.

“It’s been crazy. Since Tesla’s (announced) inclusion in the S&P, you’ve had a lot of managers out there that didn’t own enough of it having to buy more,” said Sahak Manuelian, managing director of trading at Wedbush Securities, in the US.

Retail investors using apps like Robinhood are also responsible for much of the recent volume spike, Mr. Manuelian added. Robinhood allows users to invest in stocks, options and ETF (Exchange Traded Funds) without commission.

According to Refinitiv data, traders bought and sold an average of almost $26 billion of Tesla shares per session over the five days ending on 24 November, accounting for almost 8 percent of all stocks traded on US exchanges. That is more than the combined value of trades in Amazon and Apple for the same period.

Traders had exchanged $20 billion worth of Tesla shares at about halfway through last day’s session, according to Refinitiv.

Tesla has been by far the world’s most valuable automaker, up over 400 percent in 2020, despite production that is a fraction of Toyota Motor, Volkswagen or General Motors. According to Refinitiv data, Tesla has averaged over $16 billion a day in trade over the past year, followed by Apple at around $14 billion.

In recent weeks, trading in Chinese electric vehicle maker NIO Inc has also increased, with its shares almost doubling in November.

Including NIO, trading of stocks in the nascent electric vehicle industry reached an average of $38 billion a day in the past five sessions, accounting for 12% of all trading on US exchanges. By comparison, traders in the same period bought and sold each day about $8 billion worth of oil and gas stocks including Exxon Mobil and Chevron.