Tesla shares drop after S&P 500 snob

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The recent outbreak of Tesla (NASDAQ: TSLA) was attributed, in part, to anticipation that the electric vehicle maker would soon be added to the S&P 500 Index. But the new list is out and Tesla is not on it. That caused Tesla shares to drop 7% on Friday after hours.

After markets closed on Friday, index manager S&P Dow Jones Indices announced Etsy (NASDAQ: ETSY), Teradyne (NASDAQ: TER), and Catalent (NYSE: CTLT) would be added, effective September 21. Inclusion in the index is a mark of prestige and may lead to higher stocks, as funds that follow the S&P 500 are required to add the new stocks to their portfolios.

Image source: Tesla.

Tesla shares have risen nearly 400% since the start of the year, and part of the recent uptrend can be explained by enthusiasm for its potential entry into the index. In July, the company announced its fourth consecutive profitable quarter, fulfilling the final requirement for inclusion. This led widely followed analyst Dan Ives of Wedbush to say that adding Tesla to the index was “now probably a done deal.”

Over the past few weeks, the company has taken other actions that have been deemed more interesting for the index, including its recently completed 5-for-1 stock split.

The snub ends a disappointing week for Tesla and its shareholders. The automaker’s shares fell sharply on Wednesday and came under further pressure on Thursday after Tesla announced plans to raise $ 5 billion as part of a secondary stock offering, which was linked to the announces that investment management firm and major shareholder of Tesla, Baillie Gifford, has reduced its stake in the company. from 6.3% to 5%.



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