CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Why the Tesla share price surged 13% in after-hours trade

We examine what caused investors to pile into Tesla stock, after the market closed, on Monday November 17.

Tesla share price surges on S&P inclusion news

After-hours trade on Monday proved to be a dramatic one for Tesla’s shareholders: By 7:37PM New York time, investors had bid the Tesla share price up 13% to $461 per share, in response to news that the company would be added to the S&P 500 in December.

Elon Musk’s own personal fortune rose by $15 billion as a result of these after-hours moves, as reported by Bloomberg.

Over the last few quarters, Tesla’s exclusion from the S&P 500 benchmark has become a key talking point. This is primarily due to the fact that the automaker has consistently begun to deliver profits, with Tesla’s latest third quarter results release – marking the fifth straight quarter of profitability for the company.

Beyond having a market capitalisation of at least $8.2 billion, stock which is satisfactorily liquid and has ‘a public float of at least 50% of its shares outstanding’, for a company to be included in the S&P 500, its prior quarter must be a profitable one and ‘the sum of its trailing four consecutive quarters' earnings must be positive.'

In September then, when Tesla was snubbed from the S&P, some were left scratching their heads. As we reported at the time:

‘In an email exchange with MarketWatch, Daniel Ives, from Wedbush Securities, plainly said:

"Tesla not getting into the S&P 500 club is a head scratcher and the stock will likely be down for the indexing implications."

"The Champagne was on ice to get into the S&P 500, [it] was baked into shares" – also via market watch.'

Since we wrote that on September 9, the Tesla share price is up more than 40% – at the after-hours price. Tesla is set to be added to the S&P 500 on Monday, December 21, as part of the December rebalancing.

There may however, be one final road block to that inclusion, with the S&P Dow Jones Indices noting that feedback is currently being sought ‘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 date. Tesla will replace a S&P 500 company to be named in a separate press release closer to the rebalance effective date.’

The automaker had a market capitalisation of $386 billion at the close of Monday’s trading session.

The Q3 revisited

As noted above, Tesla posted another profitable quarter in the Q3 of FY20: Total revenues were up 45% (QoQ) to $8,771 million, operating margins surged 253 basis points to 23.5% and GAAP net income came in at $331 million.

Looking ahead, the company noted that it remains committed to its previously stated goal of 500,000 vehicle deliveries in 2020. Moreover, with margins dramatically improving during the quarter, the company also noted that:

'We expect our operating margin will continue to grow over time, ultimately reaching industry-leading levels with capacity expansion and localisation plans underway.'

Want to take a position in Tesla – long or short?

Create an IG trading account or log in to your existing account to get started now.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.