According to Bloomberg, David Blitzer, former chair of the committee that decides which stocks are admitted to the S&P Dow Jones Indices, has said that Tesla’s induction into the index may take some time, even though the electric vehicle company more than meets the usual criteria for admission.
After an immensely successful Q2 that came as a surprise to everyone, Tesla had met all of the standard requirements to be considered for addition into the S&P 500. However, the S&P 500 selection committee still decided against the addition of Tesla to the index in September.
This was pretty disappointing, not only for CEO Elon Musk and Tesla as a whole but also for investors, who had already started pouring money into Tesla stock in anticipation of the company being added to the world’s most-followed stock index.
Scorned by the selection committee’s decision, financiers quickly started pulling their investments out of Tesla, with the EV giant’s stock dropping well over 15% in the days following.
David Blitzer, who ran the selection committee for a solid 25 years, stressed that while size and other formal standards qualify a company for selection, they guarantee nothing. When a company’s stock balloons in a short period of time as much as Tesla’s has, the oversight committee often wants to see whether this growth is sustained and wait for the stock to stabilize.
David is of the opinion that the induction of a company as big and successful as Tesla into the S&P 500 is all but inevitable. In an interview on the Trillions podcast, Blitzer went on to say, “I think the real question is, why the rush?”
