Reuters, September 8 – As its unexpected absence from the S&P 500 index contributed to the larger sell-off in technology companies, which have dominated Wall Street’s rebound from the coronavirus-driven slump earlier this year, Tesla Inc TSLA.O fell as much as 20% on Tuesday.
After the business reported its fourth consecutive profitable quarter in July, removing a significant barrier for its future inclusion in the benchmark stock index, Wall Street analysts and investors largely anticipated Tesla to enter the S&P 500.
The S&P Dow Jones Indices unexpectedly opted not to include pharmaceutical technology business Catalent Inc CTLT.N, semiconductor equipment manufacturer Teradyne Inc TER.O, or online craft retailer Etsy Inc ETSY.O in the S&P 500.
On Friday, senior index analyst for S&P Dow Jones Indices Howard Silverblatt declined to explain why Tesla was not included in the S&P 500.
The three businesses S&P has chosen to list are substantially smaller in scale but have a more reliable track record of profitability.
For instance, Etsy has reported earnings for 13 consecutive quarters whereas Tesla has only done so for four.
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Tesla has a market valuation of around $390 billion, which is about ten times more than the $40 billion combined stock market value of Etsy, Teradyne, and Catalent.
Tesla’s recent stock rally has been driven by its blockbuster quarterly results, as well as on bets it would be added to the S&P 500, which would trigger massive demand for its shares from index funds that track the benchmark.
Fellow electric automaker Nikola Corp NKLA.O jumped 35% on Tuesday after General Motors Co GM.N said it was acquiring an 11% stake in the company.
