REUTERS: Tesla Inc shed about US$80 billion of its market value on Tuesday, an amount that overshadows the combined value of General Motors Co and Ford Motor Co, after its surprise exclusion from the S&P 500 index.
Wall Street analysts and investors widely expected Tesla to join the S&P 500 after the company posted its fourth consecutive profitable quarter in July, clearing a major hurdle for its potential inclusion in the benchmark stock index. "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," Frank Schwope, an analyst at NORD/LB, said.Tesla's inclusion in the S&P 500 index would have required a lot of funds to buy its shares. Credit Suisse analyst Dan Levy said the exclusion likely reflects the challenges in adding a company of Tesla's size to the index.