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.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

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.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices 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.