What happened
Shares of electric-car maker Tesla (TSLA 3.55%) jumped on Tuesday, rising as much as 5.3%. As of 11:45 a.m. EST, however, the stock was up 2.3%.
The stock's gain is likely primarily driven by news that Tesla shares will be added to the S&P 500 in a single tranche before market open on Dec. 21.
Image source: Getty Images.
So what
News broke last month that Tesla would be added to the S&P 500 in December. The S&P Down Jones Indices -- a division of S&P Global (SPGI +0.97%) that makes decisions about the S&P 500 fund -- initially considered adding Tesla to the fund in two separate tranches. But the investment committee ultimately decided against this approach after consulting with market experts.
"In its decision, S&P DJI considered the wide range of responses it received, as well as, among other factors, the expected liquidity of Tesla and the market's ability to accommodate significant trading volumes on this date," S&P DJI said in a press release this week.
Some investors may be speculating that the massive addition of Tesla stock to the market cap-weighted index will move the automaker's shares higher.
Now what
Investors, of course, should stay focused on the long term. Whether or not shares receive a near-term boost from being added to the S&P 500, it will be Tesla's long-term execution that determines the trajectory of the growth stock.
