But while S&P Indexes announced late Friday that it was adding Etsy, an online marketplace for crafters; Teradyne (TER), a company specializing in industrial automation and robotics; and Catalent (CTLT), which develops pharmaceuticals, to the index, the absence of Tesla was a big disappointment for investors, prompting the sell-off.
The index requires companies to have a certain market cap and history of profitability in order to be added. Tesla easily clears the market cap threshold, being the most valuable automaker in the world. But its profitability is somewhat new. It posted its first annual operating profit in 2019.
Tuesday’s 21% tumble edged out the company’s 19% slide in January 2012, less than two years after its initial public offering. The company’s third and fourth largest one-day drops came when it lost nearly 19% on March 16, and 17% on February 5 of this year. The stock rebounded nicely from each of those sell-offs.
Still, even with the 21% decline Tuesday, Tesla shares have nearly quadrupled in value so far this year, rising 295%. The stock is down 34% since reaching a record high close on Aug. 31.
Tech stocks overall have been battered during this period, as the tech-heavy Nasdaq is down 10% since its own record high close on Sept. 2.
Fortunately for Tesla, it announced early Tuesday that it completed the sale of $5 billion worth of its shares last week before Tuesday’s drop.