Tesla’s stock prices have been skyrocketing for a long time. But, the company had recently faced a huge setback when their share prices dipped by a staggering 21.06% in a single day. To consider the size of the loss, Tesla lost over an $80 billion market share, which is more than General Motors Co and Ford Motor Co, combined.
The whole stock crash was even worsened with the 40% rise in the Nikola corp share when General Motor announced that it is acquiring an 11% share in the company.
Exclusion of the company from the S&P 500 Index
Tesla has been consistently posting profits, and therefore everyone expected the company to join the S&P 500 Index. But, the company’s recent exclusion from the same might be the reason for the stock crash. The company posted profits from 4 quarters straight but could not make it.
The S&P Dow Jones decided to include the following companies to the S&P 500 Index instead of Tesla. These companies are:
- Online craft seller Etsy Inc
- Semiconductor equipment maker Teradyne Inc
- Pharmaceutical technology company Catalent Inc
How did Tesla’s stock plunge after the decision?
Frank Schwope, an analyst at NORD/LB, said, “On the one hand, the slide in the share price is due to its non-inclusion in the S&P 500, but on the other hand, the slide is also a normalization of the company’s valuation”. The non-inclusion of the company on the list will help in balancing the share prices of the company.
The decision swayed the stock market entirely because of the dependence of the market on the news. Of the total shares of the company, 8.1% of them were shorted. The total value of these shares amounts to $25.03 billion.
Tesla’s electric vehicles are not known for their competitive pricing or wide availability, but for their innovation, quality, and vision. It’s difficult to say how this decision of non-inclusion in the S&P 500 index will affect the company’s future. Maybe Tesla will recover from the dip quickly, maybe it won’t. We have to wait and see.
What do you think about the major dip that the company saw on Tuesday, 8th September? Let us know in the comments below. If you found our content informative, do like, and share it with your friends.