TESLA STOCKS DIVE 20%, ERASE MORE THAN $76B OF MARKET VALUE
Tesla stock plunged as much as 20% on Tuesday, wiping more than $76 billion from its market capitalization and other tech stocks such as Apple, Microsoft, and Facebook fell sharply as well.
Elon Musk's electric-car maker was surprisingly excluded from the next round of additions to the S&P 500 last week, and a key shareholder also cut its stake, Theron Mohamed reported for BusinessInsider late on September 8, 2020.
Shares in Apple, Amazon, Microsoft, Alphabet, and Facebook all fell as much as 3%. Investors may be disappointed by Tesla's shock exclusion from the S&P 500 index. The company turned a fourth consecutive quarterly profit in the three months to June 30, meeting the last of the benchmark's eligibility criteria.
Many investors expected it to be drafted into the index as a result, especially as it dwarfs most S&P 500 companies in terms of market capitalization. However, S&P Dow Jones Indices - which manages the S&P 500 - dashed those hopes on Friday by announcing Etsy, Teradyne, and Catalent as the latest additions to the index, replacing H&R Block, Coty, and Kohl's. It made no mention of Tesla. The committee may be wary of including Tesla given its volatile stock price, which has skyrocketed more than 350% this year and hit record highs. The automaker's first-half profits were also flattered by $782 million in sales of regulatory credits to other companies. Tesla's stock drop follows its five-for-one stock split and announcement of a $5 billion share sale last week. Its largest external shareholder, Baillie Gifford, also disclosed that it cut its stake from about 6.4% to 4.3% due to internal limits on the weight of a single stock in its client portfolios.