Does this mean Tesla stock, which has rallied a mind-boggling 700% or so this year, will climb even higher? There’s a lot of research on this because S&P 500 additions happen fairly often. New additions climb about 5% or so on average from the time of the announcement of their inclusion in the index, Mackintosh says. That jump usually takes place quickly after the news gets released. But Tesla’s increase has been much bigger—as much as 14%. Some of that exuberance seemed to have burned off in early morning trading today, as shares were down about 5% before the stock market opened.

When a stock joins the S&P 500, it can become more liquid, meaning it’s easier to trade large chunks of the company’s equity without causing prices to gyrate. There are futures, which allow traders to hedge or speculate on a stock’s price at some later date, tied to the S&P benchmark, which also helps make buying and selling more efficient. “Liquidity broadly picks up,” Mackintosh said.

One of the requirements to be included in the S&P 500 is that a company’s most recent quarterly earnings and the sum of its most recent four consecutive quarters’ of earnings must be positive. Musk’s company can tick that box, but its profits would look a lot different if not for the sale of regulatory credits tied to pollution.

Experts have questioned the benefits of S&P’s profit requirements for index inclusion, Mackintosh says. The rule kept Google out of the flagship US stock benchmark for a number of years. (It was finally added to the S&P in 2006.) “A lot of the big growing companies enter the S&P quite late because of that rule,” he says.

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