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Tesla (TSLA) shares down 17% after S&P 500 snub
Tesla’s (TSLA) recent slump continued on Tuesday as shares declined 17% in early trading after the electric car company was overlooked for inclusion in the S&P 500.
Tesla became eligible for the popular stock market index after posting a fourth consecutive quarter of profits in July, and investors were confident that the company would be added in the latest reshuffle.
Baird analyst Ben Kallo noted last week that TSLA shares had increased recently to reflect the assumed conclusion.
Kallo believes that the omission, confirmed on Friday by the S&P Index Committee, is a “relatively surprising development”.
Tesla was overlooked in favour of Etsy, Teradyne and Catalent.
Tesla shares retreated last week amid a wider tech sell-off, and it ventured into negative territory again on Tuesday.
TSLA was trading 17% lower after the first bell before a modest rally shaved losses to 14.41% at 10:14am ET on the Nasdaq.
Stock is now valued at $361.50 per share.
While Tesla has plummeted since its record high on 31st August following a five-to-one stock split, it remains up more than 400% for the year to date.
Kallo said on Tuesday that he expects Tesla to make the S&P 500 cut in the future but believes that investors may reconsider their positions in the short term.
He added: “We think the stock could be under pressure following the delay of S&P 500 inclusion, particularly from investors who bought ahead of the announcement expecting an opportunity to sell to passive funds.”
Tesla’s market valuation has ballooned this year to more than $390bn as of last Friday, making it more valuable than other car manufacturers such as Volkswagen and Toyota.
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