Tesla shares tanked as much as 13% in pre-market trading on Tuesday following the shock exclusion of the world’s most-valuable automaker from the S&P 500 index.
Elon Musk’s electric-vehicle 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 its almost $400 billion market capitalization dwarfs most S&P 500 companies.
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 almost 400% 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 latest 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.