Tesla Shares Plunge As It Fails To Make It Into S&P 500 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 normalisation of the company’s valuation,” Frank Schwope, an analyst at NORD/LB, said.

With a market capitalization of about $390 billion, Tesla is nearly 10 times larger than Etsy, Teradyne and Catalent’s combined stock market value of about $40 billion.

Tesla’s recent stock rally has been driven by its blockbuster quarterly results, as well as on bets it would be added to the S&P 500, which would trigger massive demand for its shares from index funds that track the benchmark.

Fellow electric automaker Nikola Corp jumped 35% on Tuesday after General Motors Co said it was acquiring an 11% stake in the company.