In just one day, Elon Musk added $7.6 billion to his fortune and overtook Facebook co-founder and CEO Mark Zuckerberg as the third-richest person in the world, with a fortune estimated at $110 billion, according to Bloomberg’s Billionaires Index.
His fortune is primarily linked to stakes in Tesla, which he controls, and other private firms like SpaceX.
The jump in the ranking happened because of Tesla´s stock price, which jumped 8% after the S&P and Dow Jones Indices announced late Monday that the electric-car maker stock would be added to the S&P 500 before the market opens on December 21.
The data is when the quarterly rebalancing of the index occurs. The market was expecting Tesla to join the index previously in September.
The company which Tesla will replace in the index has not been released yet.
The S&P measures the stock performance of the 500 large companies listed in the U.S. It’s one of the most commonly followed indices.
Entry to the S&P 500 will put Tesla among the index’s ten most valuable companies, more massive than JPMorgan Chase, for instance.
On Wednesday, Tesla´s shares rose another 10%, to $486.64, giving the company a market valuation of about $460 billion.
This year, it gained an incredible 480%.
Experts say that when a stock is added to an index, it normally rises in the short-term, but not necessarily in the long-term.
One reason is that portfolio managers of passive funds that track the S&P 500 index and have the goal to beat it will have to buy Tesla’s stocks — like it or not. They are expected to buy about $ 50 billion of Tesla’s shares.
According to Reuters, Refinitiv Eikon data shows that, excluding index funds, about 700 investment funds own or recently owned Tesla, compared to over 2,100 funds holding Johnson & Johnson, an S&P 500 component with a value similar to Tesla.
Many have avoided Tesla so far because of its volatility, and also because the company has huge debts and hasn’t had a strong record of profits, despite it showing gains in the last five quarters. Some even believe that the stock, which rose 480% already this year, is a bubble.
Tesla is also facing increasing competition from automakers in the U.S., Europe, and China, who are also launching new electric-cars.