Elon Musk's rising electric car powerhouse Tesla reached another landmark Monday when it officially qualified for the prestigious SP 500.
The California-based automaker will join the broad-based market index on December 21, SP Dow Jones Indices announced Monday, prompting another wave of affection for Tesla stock.
Tesla's shares surged 14 percent on Monday in anticipation of a $51 billion trade by index funds adjusting their holdings.
Moving into the SP is a marker of prestige and also boosts valuation because some mutual funds and other investment vehicles are linked to the benchmark.
With a stock market value over $400 billion, Tesla will be among the most valuable companies ever added to the widely followed stock market index, larger than 95 percent of the SP 500's existing components.
As a result, the index 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," SP Dow Jones Indices said.
Up about 450 percent in 2020, Tesla has become the most valuable auto company in the world, by far, despite production that is a fraction of rivals such as Toyota Motor Corp., Volkswagen and General Motors.
Tesla short sellers point to looming competition from longer-established rivals. They are also skeptical of Tesla's corporate governance under Musk, who in 2018 agreed to pay $20 million and step down as chairman to settle fraud charges.