Tesla shed about US$80-billion of its market value on Tuesday, an amount that overshadows the combined value of General Motors and Ford, after its surprise exclusion from the S&P 500 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 21.1% lower, while fellow electric automaker Nikola jumped more than 40% after General Motors said it was acquiring an 11% stake in the company.
Wall Street analysts and investors widely expected Tesla to join the S&P 500 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, semiconductor equipment maker Teradyne and pharmaceutical technology company Catalent to the S&P 500 instead.
“On 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 normalisation of the company’s valuation,” Frank Schwope, an analyst at NORD/LB, said.