Those investors who purchased Tesla shares earlier this year and rode a massive wave of enthusiasm for the stock are now suffering the fallout as its price crumbles. Over the last five days, the shares have fallen 34%. Matthew Rocco and Richard Waters report for the Financial Times:
Tesla’s stock on Tuesday fell by the most on record, in a sell-off sparked by news that the electric car pioneer was passed over for inclusion in the S&P 500.
The shares were down 21 per cent, closing at $330.21, in their biggest slide since Tesla made its trading debut in 2010. The retreat pushed the shares to a three-week low amid a broader sell-off on Wall Street that hit big technology companies especially hard. The carmaker was the worst performer of any Nasdaq 100 component on Tuesday.
The extreme volatility in Tesla’s shares has left them susceptible to wild swings. The retreat wiped about $82bn from its shares, though it gained $52bn in a single day at the end of August.
Tesla shares had surged sixfold since the start of the year — a rally that at one point left it worth more than twice as much as Toyota, the world’s next most valuable carmaker. They have since fallen back 34 per cent in the space of five trading sessions.
S&P Dow Jones Indices, which manages the S&P 500, passed over Tesla late on Friday when it announced three new companies to add to the benchmark index as part of its regular quarterly reweighting. Hopes that Tesla would be added, forcing a wave of buying as fund managers that track the index have to add it to their portfolios to mirror the benchmark, had contributed to the frenzied buying in August.
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