Tesla stock drops 21% in single day after not being added to S&P 500

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Tesla’s stock fell 21% in one day, but it’s still up from what it was a year ago. Getty Images

The rise in Tesla’s share price over the past year has been, frankly a little silly. The value of stocks climbed around 300% and for a long time showed no signs of slowing down.

Well, according to a report released Tuesday by CNBC, Tesla’s stock hasn’t just slowed down; he hit a wall. Specifically, I mean Tesla’s stock fell 21.06%, making Tuesday the worst single-day drop in its (admittedly not that long) history. But why? What changed?

The S&P 500 has changed and those changes did not include the Big T. See, unlike other indices which are based only on data, the S&P 500 is determined by a committee with quarterly adjustments. This time around, people suspected Tesla might be on the list, but it wasn’t.

Instead, Standard & Poor’s added online retailer Etsy, pharmaceutical company Catalent, and testing equipment company Teradyne. Now, because of how mutual funds work, they have to invest in companies that are on the list. It drives up the values ​​of these companies, which is cool, but since Tesla was not invited to the party, people are a little worried.

What does this mean for Tesla in the long run? It’s hard to say with confidence, but probably nothing. Also, just because it wasn’t added this time around doesn’t mean it won’t be included in the future.

Tesla did not immediately respond to Roadshow’s request for comment.


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