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Tesla Joins S&P 500

November 17, 2020

Tesla will be added to the S&P 500 effective prior to the open of trading on Monday, December 21 to coincide with the December quarterly rebalance. Due to the large size of the addition, S&P Dow Jones Indices 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 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.

Due to the large size of the addition, S&P DJI is seeking feedback on whether to add the stock at:

1) The full float-adjusted market capitalization (FMC) weight all at once, effective prior to the open of trading on Monday, December 21, or

2) In two tranches, with the first tranche added one week earlier (effective prior to the open on Monday, December 14), and the second tranche added effective on the rebalancing effective date.

IMPACT ANALYSIS

The table below shows the projected weight of TSLA in the S&P 500. Based on recent market capitalization figures, TSLA will be one of the largest weight additions to the S&P 500 in the last decade, and consequently will generate one of the largest funding trades in S&P 500 history. However, TSLA itself is very liquid, and adding the stock at the upcoming December quarterly rebalancingcoincides with the expiration of stock options, stock futures, stock-index options, and stock-index futures, which may help facilitate the funding trade.

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