Tesla Inc. shares slumped in U.S. pre-market trading on Tuesday after the electric-vehicle maker missed out on being included in the S&P 500 Index, taking investors who had bet on its entry to the benchmark by surprise.
Tesla shares fell about 10 per cent pre-market in the first day of trading since Friday’s news. Instead of Elon Musk’s Tesla, S&P Dow Jones Indices added online retailer Etsy Inc., chip gear maker Teradyne Inc. and medical technology firm Catalent Inc.
“There may be question marks about the sustainability of regulatory emission credit sales which are currently underpinning earnings,” said Michael Dean, an analyst with Bloomberg Intelligence. “This may have influenced its failure to make it into the S&P 500.”
Tesla not being included likely reflects the challenges in adding a firm of that size to the index, Credit Suisse analyst Dan Levy wrote in a note on Sept. 6. Levy added that Tesla is still expected to be added to the index, however.