Tesla’s stock on Tuesday fell by the most since March, in a sell-off sparked by news that the electric car pioneer was passed over by the S&P 500.
The shares were down 17.3 per cent to $346.04 in morning trade, dropping to a three-week low amid a broader sell-off on Wall Street that hit major technology companies especially hard.
Before their drop on Tuesday, Tesla shares had surged fivefold since the start of the year — a rally that had made it the world’s most valuable car company, overtaking Toyota in market capitalisation this summer.
Its stock remains more than four-times higher year-to-date.
S&P Dow Jones Indices, which manages the S&P 500, announced that it had opted against adding the electric car maker to the benchmark index after the close of trade on Friday, choosing instead to add three smaller companies in the first round of additions since June.
General Motors’ deal to take a $2bn equity stake in Nikola, the Arizona-based electric and hydrogen vehicle developer, increased the pressure on Tesla’s shares. The agreement, which also calls for GM to engineer and build a pick-up truck for Nikola, sent shares of the upstart company up nearly 40 per cent.
Garrett Nelson, analyst at CFRA, said Tesla could join the S&P 500 by the end of the month, when the S&P index committee is scheduled to meet.
Mr Nelson said the potential move “is likely to prompt a new wave of buying”, adding that the stock’s recent slide was also prompted by news that Tesla would launch a $5bn equity offering.
Read more from source here…