Tesla shares tanked on Tuesday as it was caught up in the sell-off of tech stocks.
Tesla fell over 27% on Tuesday, erasing tens of billion of dollars from the market capitalization of the world’s most valuable automaker.
Shares in Apple, Amazon, Microsoft, Alphabet, and Facebook all fell as much as 3%.
At the time of this report;
- Dow 30 – down by 1.77%
- S&P 500 – down by 2.08%
- NASDAQ 100 – down by 3.28%
Tesla’s stock drop follows its five-for-one stock split and announcement of a $5 billion share sale last week.
Tesla missed being drafted into the S&P 500 Index although it posted a profit for a fourth straight quarter in the three months to June 30, meeting the last of the benchmark’s eligibility criteria.
Many investors expected Tesla to make S&P 500 index 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, according to Business Insider. Tesla 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 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.