Etsy gets into S&P 500, Tesla does not
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Shares of Tesla tumbled 7% in extended trade on Friday after the electric car maker was excluded from a group of companies being added to the S&P 500, among them Etsy, whose stock market value is less than a 20th of Tesla's.
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The decision by S&P Dow Jones Indices is a blow to Tesla investors who widely expected the company to join the benchmark stock index after a blockbuster quarterly report in July cleared a major hurdle for its potential inclusion.
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S&P Dow Jones Indices said in a statement it was adding online craft seller Etsy, semiconductor equipment maker Teradyne and pharmaceutical technology company Catalent to the S&P 500, effective Sept. 21, and removing H&R Block, Coty and Kohls.
Shares of Etsy jumped 6% in extended trade, Teradyne rose 2%, and Catalent added 2%.
S&P Dow Jones Indices senior index analyst Howard Silverblatt declined to say why Tesla was not added to the S&P 500, which is tracked by index funds with at least $4.4 trillion in assets.
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"The market is continuously changing, and we need to reflect that in our indices," Silverblatt said.
With a market capitalization over $370 billion, Tesla is one of the most valuable companies on Wall Street. Even after a 16% drop in its share price from record highs this week, Tesla remains more valuable than 95% of the S&P 500's existing components, including Johnson & Johnson and Procter & Gamble.
Etsy, Teradyne and Catalent have a combined stock market value of about $40 billion.
Tesla, which is up nearly 400% so far in 2020, is among the most loved – and hated – stocks on Wall Street. It is the U.S. stock market’s highest-profile bet on the rise of renewable energy and the decline of fossil fuels, and Tesla’s Model 3 sedan has made major inroads among consumers.
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Its recent stock gains have been driven by Tesla's unexpectedly strong quarterly results released in July, as well as by bets that it would be added to the S&P 500, which would trigger massive demand for its shares from index funds that track the benchmark.
Tesla bears point to looming competition from Porsche , General Motors and other longer-established rivals. They are also skeptical of Tesla’s corporate governance under Chief Executive Elon Musk, who in 2018 agreed to pay $20 million and step down as chairman to settle fraud charges.
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Short sellers are betting $24 billion that Tesla’s shares will fall, among the largest short levels on record for a U.S. company, in dollars, according to S3 Partners. (Reporting by Noel Randewich in San Francisco; Additional reporting by Akanksha Rana in Bengaluru; Editing by Leslie Adler)
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