Tesla overlooked for S&P 500, stock tumbles by around one-fifth | News | DW | 09.09.2020
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Tesla overlooked for S&P 500, stock tumbles by around one-fifth

Shares in electric carmaker Tesla shed a fifth of their value, partly owing to a surprise decision not to incorporate it into the US' leading S&P 500 index. But the dip was just a fraction of recent gains.

S&P Dow Jones Indices, the owner of the S&P 500 index, wiped $80 billion off the market value of electric car-maker Tesla Inc on Tuesday, when it excluded the company from the stock market index of US's 500 largest companies.

Tesla's shares closed the day 21.06% lower, its worst loss since it began trading a decade ago. The company was expected to join the index after posting four consecutive quarters of profit — the requirement for inclusion in the market which for years had eluded the investment-heavy carmaker with low sales and production volumes.

However, the sudden slide in Tesla's prices could also be seen as readjustment after a meteoric few months during the economic upheaval caused by the coronavirus. Tesla's shares had risen in value more than five-fold between mid-March and the end of August during an extremely volatile period for the US economy and its markets.

Tesla's slide also coincided with a sentiment in tech stocks in general taking a hit. Apple closed 6.7% lower on Tuesday, while Microsoft was down by 5.4%.

Read more:  Teutonic Tesla: Elon Musk's busy week in Germany

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E-mobility: Tesla pushes ahead with Gigafactory in Germany

Tesla falls as Nikola rises

Meanwhile, another US electric car-maker named after the Serbian-American scientist behind alternating current, Nikola Corp, reported a 40% jump in its shares on Tuesday, on the back of a $2 billion manufacturing deal with General Motors (GM). GM also announced the purchase of an 11% stake in Tesla's competitor as part of the deal. Nikola is one of comparatively few companies seeking to manufacture larger electric trucks, also using hydrogen fuel cell technologies.

Surprise S&P inclusions 

Etsy Inc, an online retailer, Teradyne Inc, which specializes in automatic test equipment mainly for electronics, and Catalent Inc, a pharmaceutical technology company, were the surprise choices over Tesla for inclusion in the S&P 500. 

Read more:  What German Gigafactory neighbors make of Tesla's Elon Musk

Dan Levy, an analyst with Credit Suisse, told Reuters that the company, founded by billionaire Elon Musk, may have been excluded as there were challenges in adding a company of Tesla's size to the index.

Tesla's market capitalization stands at $390 billion, almost 10 times more than the market capitalization of Etsy, Teradyne and Catalent combined.

am/msh (Reuters, AP, dpa)

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