Tesla shares plummetSeptember 9, 2020
Tesla Inc. shares fell on Tuesday after the electric car maker missed listing in the S&P 500, which caught investors off guard who were betting on its entry into the benchmark index.
Tesla shares closed Tuesday with a 21% decline to $ 330.21, the largest one-day loss since early February. The dip began in the premarket and worsened as General Motors said it would take on a $ 2 billion stake in Nikola Corp. and will partner with the fledgling pickup manufacturer to design and manufacture the Badger pickup truck.
Ahead of Friday’s S&P announcement, Tesla’s price largely mirrored the intended inclusion, said Baird analyst Ben Kallo, who called the decision “a relatively unexpected development.”
Instead of Elon Musk’s Tesla, S&P Dow Jones Indices added Etsy Inc., a chip maker Teradyne Inc. and medical technology company Catalent Inc.
“We think the stock reflects expectations of significant passive inflows,” Callot wrote on Tuesday. “We think stocks could come under pressure due to the delay in the inclusion of the S&P 500, especially from investors who bought before the announcement, waiting to sell them to passive funds.”
Callo said he still expects Tesla to eventually be added to the benchmark, and the company’s Battery Day event, scheduled for September 22, could be a positive catalyst.
Tesla’s failure to make it onto the S&P 500 could be due to “question marks about the sustainability of the regulatory emission credit sales, which currently underpin profits,” – said Michael Dean, an analyst at Bloomberg Intelligence. Tesla shares soared more than 300 percent this year, making it the second-best performing Nasdaq 100, behind Zoom Video Communications Inc. The automaker reported its fourth straight quarterly profit in July.
Tesla shares entered a correction last week after news that the company’s second-largest shareholder has cut its stake, and as the market is slowly digesting Tesla’s plan to sell up to $ 5 billion in shares.
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