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Tesla loses more than combined GM, Ford m-cap after S&P 500 index exclusion

Tesla's shares recorded their worst single-day percentage drop ever and added to the broader sell-off in technology stocks

Topics
Tesla | S&P 500 | General Motors

Reuters 

By Subrat Patnaik

(Reuters) - Inc shed about $80 billion of its market value on Tuesday, an amount that overshadows the combined value of Co and Co , after its surprise exclusion from the index.

Tesla's shares recorded their worst single-day percentage drop ever and added to the broader sell-off in technology stocks, which have dominated Wall Street's recovery from the coronavirus-driven crash earlier this year.

The stock closed 21.06% lower, while fellow electric automaker Nikola Corp jumped more than 40% after said it was acquiring an 11% stake in the company.

Wall Street analysts and investors widely expected to join the after the company posted its fourth consecutive profitable quarter in July, clearing a major hurdle for its potential inclusion in the benchmark stock index.

In a surprise announcement, the S&P Dow Jones Indices decided to add online craft seller Etsy Inc , semiconductor equipment maker Teradyne Inc and pharmaceutical technology company Catalent Inc to the instead.

"On the one hand, the slide in the share price is due to its non-inclusion in the S&P 500, but on the other hand the slide is also a normalization of the company's valuation," Frank Schwope, an analyst at NORD/LB, said.

Tesla's inclusion in the S&P 500 index would have required a lot of funds to buy its shares. Credit Suisse analyst Dan Levy said the exclusion likely reflects the challenges in adding a company of Tesla's size to the index.

Bets against Tesla's stock have also increased slightly over the last month, according to financial analytics firm S3 Partners.

On Tuesday morning, short interest in was $25.03 billion, with about 8.10% of its outstanding shares shorted.

Tesla's recent stock rally has been driven by its blockbuster quarterly results and on bets it would be added to the S&P 500, which would trigger massive demand for its shares from index funds that track the benchmark.

 

 

(Reporting by Subrat Patnaik, additional reporting by Munsif Vengattil and Noor Zainab Hussain in Bengaluru; Editing by Shounak Dasgupta, Aditya Soni and Krishna Chandra Eluri)

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First Published: Wed, September 09 2020. 08:03 IST
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