Tesla shares tumbled in premarket trading Tuesday, after Elon Musk’s electric vehicle maker was left out of the S&P 500 by the committee that decides on new additions to the index.
Tesla shares were down 15% ahead of the opening bell. The stock has been on a tear this year, having risen around 400%, and the company is now worth more than some of the world’s largest automakers, including Toyota and Volkswagen.
On Friday, the S&P 500 Index Committee decided to add e-commerce site Etsy, automatic test equipment maker Teradyne and pharmaceutical firm Catalent to the S&P 500, but stopped short of including Tesla. Some investors had expected Tesla to be included this quarter, after it reported its fourth consecutive quarter of profitability in July.
Tesla stock dropped more than 7% after hours on Friday following the news. U.S. markets were closed Monday because of Labor Day.
Tesla’s move lower Tuesday also follows a major reversal in the big technology stocks last week, amid fears that valuations had reached unsustainable levels. Japanese tech investment juggernaut SoftBank was reportedly the mystery “Nasdaq whale” that bought billions of dollars in call options in Big Tech names, including Tesla, Amazon, Microsoft and Netflix, potentially driving up valuations. SoftBank declined to comment on the reports.
Nasdaq futures were down more than 2% early Tuesday.
Tesla split its stock 5-to-1 at the end of last month, a move that saw its value climb significantly in the run-up despite having no fundamental impact on the stock. But it fell a few days later after Baillie Gifford, its largest outside shareholder, cut its stake in the company. Baillie Gifford said the reduction in ownership was merely down to portfolio restrictions.
Tesla said Tuesday it completed its sale of $5 billion in new stock. The firm closed out the sale by Friday, according to a regulatory filing, just three days after announcing plans to sell the additional shares on Sept. 1.