A blow to the share price of electric carmaker Tesla with the company missing out being included in the rebalancing of the SP&500 index, the world’s most important share price gauge.
What makes it all the more galling for Tesla and CEO Elon Musk is that smaller online craft company, Etsy is one of the three companies included in the rebalance.
Tesla met S&P’s profits criteria but obviously that wasn’t enough. The shares plunged in after-hours trading on Friday when the rebalance details become known.
Besides Etsy, S&P Dow Jones Indices said in a statement it was also adding, semiconductor equipment maker Teradyne and pharmaceutical technology company Catalent to the S&P 500, effective from Monday, September 21.
It removed H&R Block, Coty, and Kohls (a big US department store chain).
Shares of Etsy jumped 5.7% in after-hours trade, Teradyne rose 2%, and Catalent added 2%.
Tesla shares thought fell sharply, losing 6.4% to end at $US391.33 after a rise of 2.7% in regular trading as investors were confident of Tesla’s inclusion.
That wasn’t announced and the after-hours fall took the loss for the week to well over 12%. Tesla shares hit their all-time high on Monday (after the five for one split) of $US502.49.
The after-hours close on Friday was 21.6% lower than Monday’s record high.
Reuters said S&P Dow Jones Indices senior index analyst Howard Silverblatt declined to say why Tesla was not added to the S&P 500, which is tracked by index funds with at least $US4.4 trillion in assets.
“The market is continuously changing, and we need to reflect that in our indices,” Silverblatt said, according to Reuters.
To be eligible to join the S&P 500, a company must be based in the US, have a market cap of at least $US8.2 billion, be highly liquid, have at least 50% of its shares available to the public, and its most recent quarter’s earnings and the sum of its trailing four consecutive quarters’ earnings must be positive.
In July, Tesla reported its 4th consecutive profitable quarter, and in August, it announced the five for one stock split that happened before trading started on Monday and saw the shares hit an all-time high.
That was to make its shares more affordable for average investors and it proved to be a one day wonder with a rapid sell-off through Thursday before Friday’s in session rise ahead of the expected coronation by S&P Indices.
That didn’t happen and down went the shares, cutting the market cap to under $US400 billion or a loss of more than $US25 billion.
