Tesla Slides on First Day of Trading on S&P 500 Index
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Tesla Inc. was among the biggest drags on the S&P 500 in its first day of trading on the benchmark.
The electric-vehicle maker, which is now ranked as one of the heaviest-weighted stocks and represents 1.6% of the index, fell as much as 6.3% as it retracted gains from Dec. 18 when tens of millions of shares were purchased by index-fund managers. The S&P 500 fell as much as 1.9%.
Institutional buying of Tesla surged late Dec. 18 as index-tracking managers rushed to add the shares to their funds. Almost $60 billion worth of stock changed hands at $695 a share, most of it in one giant trade in the session’s waning seconds. The price was about 5% higher than Tesla’s level just prior to the close. More than $150 billion worth of Tesla shares traded on Dec. 18, ahead of the index inclusion.
Other electric vehicle companies, whose shares have gained significantly over the past month after the S&P 500 inclusion was announced, were also weak on Dec. 21. Some of the biggest declines came from Nikola Corp., Electrameccanica Vehicles Corp. and Workhorse Group Inc.
Tesla has catapulted 731% this year in anticipation of the historic inclusion, making it the biggest company ever to be added to the benchmark. The EV pioneer also joined the S&P 100, replacing oil and gas firm Occidental Petroleum Corp.
“There is strong precedence for positive returns for stocks prior to S&P 500 inclusion and post announcement, but very limited precedent for near term out performance post inclusion,” Sanford C. Bernstein analyst Toni Sacconaghi wrote in a note earlier this month.
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