Tesla shares set for worst day in six months as tech sell-off bites
Tesla’s share price fell more than 18 per cent as Wall Street opened this afternoon, putting it on track for its worst performance in nearly six months as investors spurned US tech stocks.
The electric carmaker was excluded from a group of companies being added to the S&P 500 index — a milestone the company had been predicted to achieve for the first time after posting four consecutive profitable quarters.
Tesla was also affected by the news that General Motors is to take a $2bn stake in electric car rival Nikola, sending the latter’s shares up by almost 30 per cent.
Meanwhile a share price rally for major technology companies also came to a halt today, with shares of Facebook, Amazon, Apple, Netflix and Google parent Alphabet — also known as the FAANG group of stocks — falling between 1.9 per cent and 4.8 per cent.
Tesla’s fortunes had been on the rise before today, with a recent boom in its share price buoyed by analyst predictions of its upcoming S&P 500 entry.
In a surprise announcement, the S&P Dow Jones Indices decided to add online craft seller Etsy, semiconductor equipment maker Teradyne and pharmaceutical technology company Catalent to the S&P 500 instead.
Tesla has a market capitalisation of about $390bn — making it nearly 10 times larger than Etsy, Teradyne and Catalent’s combined stock market value of about $40bn.
Investors had been betting on Tesla’s debut on the index, which would have made its shares eligible for trading in a wide variety of index funds that track the benchmark.
The electric carmaker had recently announced a five-one stock split, making its shares cheaper for investors to buy. It also revealed a move to sell $5bn in new shares.