After a wild run that saw its share price increase more than fivefold since the start of the year, Tesla continues to spiral back down to earth.
Elon Musk’s electric car company closed out the trading day more than 20% below where it opened on Tuesday morning, following a three-day weekend during which investors had plenty of time to digest the sobering news that Tesla would not be added to the S&P 500 index.
On Friday, S&P Dow Jones Indices announced instead that three companies—sales platform Etsy, test equipment maker Teradyne, and pharmaceutical firm Catalent—would be added to the 500 that make up the S&P index.
Which companies are getting bumped? H&R Block, Coty, and Kohl’s.
It’s not that Tesla didn’t qualify. After its most recent earnings report demonstrated four consecutive quarters of profitability, the company was a candidate for inclusion, but a committee ultimately decides, and those final internal decisions are based on more than metrics. Some analysts have speculated that Tesla may have been snubbed in part because its profits have been driven by sales of emissions credits to other car companies.
Inclusion on the S&P would have created fresh demand for Tesla stock from index buyers, but that possibility was one of only a number of factors driving Tesla’s share price northward over the last several weeks. The company also announced a stock split—which makes it more appealing to retail investors—and it was riding a tech-focused rally that had propped up the market more broadly.
But that rally ended last week, and Tesla has seen its shares tumble along with COVID-19-era winners such as Apple, Amazon, and Zoom.
Tesla shares are down more than 35% from their high point a week ago, which happened right after the stock split.