Tesla falls after anticipated S&P inclusion fails to materialize
- Elon Musk’s Tesla is widely expected to be added to the prestigious S&P benchmark after it posted a fourth consecutive quarterly profit in July.
Tesla Inc. shares tumbled 6% postmarket Friday as investors who contributed to its jaw-dropping rally this year in anticipation it may join the S&P 500 Index will have to wait for another day.
Elon Musk’s electric-vehicle maker is widely expected to be added to the prestigious benchmark after it posted a fourth consecutive quarterly profit in July, clearing the last major hurdle for consideration by S&P Dow Jones Indices, which oversees the gauge. Some, including Credit Suisse analyst Dan Levy, said the move might be announced Friday in order for the stock to begin trading as an S&P component this month, although he added that there was no guarantee a decision was imminent.
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Instead, online retailer Etsy Inc., semiconductor manufacturer Teradyne Inc. and medical technology firm Catalent Inc. were added, replacing H&R Block Inc., Coty Inc. and Kohl’s Corp. Etsy rose 4.8% postmarket, Teradyne rose 3% and Catalent rose 3.6% on the news
Addition to the S&P 500 greatly broadens a company’s investor base as it’s included in index-tracking funds that control more than $11 trillion in assets.
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Tesla shares have gained 400% this year. The stock fell as much as 8.6% in regular trading Friday, adding to an 18% decline over the previous three days, but closed with a 2.8% gain. The earlier declines may have been prompted by news of the company’s second-largest shareholder cutting its stake, as well as the company’s plan to sell as much as $5 billion in shares.