LIVE MARKETS-Tesla tie-up could be SpaceX's ticket to the S&P 500, JPM says
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
TESLA TIE-UP COULD BE SPACEX'S TICKET TO THE S&P 500, JPM SAYS
Elon Musk earlier this week said that a merger of his two companies SpaceX SPCX.O and Tesla TSLA.O would be "a good idea" and that they had formed special committees to discuss a union.
While Wall Street has been abuzz with talk of pros and cons of the deal, analysts at JPMorgan noted that a deal could pave the way for SpaceX to sneak into the benchmark S&P 500 .SPX index, of which Tesla is already a part.
To join the S&P 500, a company must trade publicly for at least 12 months, be profitable under US accounting standards for the most recent quarter and across the trailing four quarters and hold a free float of at least 10%.
SpaceX currently meets none of these criteria and could wait until at least July 2027 for entry as S&P Dow Jones Indices earlier this year declined to relax rules for megacap IPOs to join the benchmark S&P 500.
That timeline could switch up in the case of a stock-for-stock transaction between Musk's two companies, JPMorgan said, as historical precedent suggests the S&P Index Committee could exercise discretion and grant exceptions to certain eligibility requirements.
These exceptions could come in order to preserve benchmark continuity and minimize unnecessary index turnover, particularly given the size and market significance of the combined company.
Under this scenario, SpaceX would likely become eligible for inclusion and generate passive demand equivalent to roughly 10% of free-float shares at the time of the transaction, JPMorgan estimated.
(Shashwat Chauhan)
EARLIER ON LIVE MARKETS:
BOFA CLIENTS DUMP STOCKS AS TECH OUTFLOWS HIT RECORD CLICK HERE
NESTING DOLLS: JOBLESS CLAIMS, LEADING INDICATORS CLICK HERE
CAN BIG TECH AFFORD TO DISAPPOINT? CLICK HERE
NASDAQ LEADS DECLINES AS CHIP STOCKS TUMBLE CLICK HERE
BOFA SAYS FEARS OF AI DISRUPTING SOFTWARE ARE OVERSTATED CLICK HERE
NASDAQ'S FIVE-MONTH STALL LEAVES SUPPORT IN THE SPOTLIGHT CLICK HERE
EUROPEAN HEALTHCARE AND CONSUMER STOCKS AS AI HEDGES CLICK HERE
GO LONG GILTS INTO THE BUDGET, UBS SAYS CLICK HERE
LOTS OF REASONS TO SELL EUROPEAN STOCKS ON THURSDAY CLICK HERE
BEFORE THE BELL: LOTS OF COMPANIES REPORTING INTO A SHAKY MARKET CLICK HERE
MORNING BID: FRANCE'S DEBT STRAINS, AI IN FOCUS CLICK HERE