Tesla’s market value fell by about $80 billion on Tuesday, more than GM and Ford had in total, after it was unexpectedly excluded from the Standard and Poor’s 500-stock index. Tesla’s shares posted their biggest one-day percentage drop on record and exacerbated a broader sell-off in technology stocks. Earlier this year, technology stocks led Wall Street’s recovery from a coronavirus-induced crash.
The stock closed down 21.06 per cent, while Nikolai, also an electric car maker, rose more than 40 per cent after general motors announced its acquisition of an 11 per cent stake in the company.
Wall Street analysts and investors had widely expected Tesla to join the Standard and Poor’s 500 index. It follows the company’s fourth consecutive quarterly profit in July, clearing a major hurdle to inclusion in the benchmark index. But the Dow Jones Industrial Average unexpectedly announced the inclusion of online craft seller Etsy, semiconductor equipment maker Teradyne and pharmaceutical technology company Catalent in the index. “On the one hand, the company’s share price has fallen because it is not included in the Standard and Poor’s 500 index, but on the other hand, the decline in the company’s valuation is also the norm,” some analysts said. “
Including Tesla in the S.P. 500 would require a lot of money to buy its stock. The exclusion of Tesla may reflect the challenge of including companies of Tesla’s size in the index, said Credit Suisse analyst Levy.
Bets on Tesla’s stock also rose slightly from the previous month, according to S3 Partners, a financial analytics firm.
Tesla’s shares were shorted tuesday for $25.03 billion, and about 8.10 percent of the issued shares were shorted.