Tesla tanks after being left out of S&P 500 index

Tesla shares tanked in pre-market trade on Tuesday after the stock was left out of the S&P 500 index.

The shares were not admitted to the S&P 500 in the reshuffle that took place after the close of markets on Friday. Equity markets were closed in the US on Monday for Labor Day.

S&P Dow Jones Indices, which manages the S&P 500 index, announced on Friday that Etsy, Teradyne and Catalent were being added to the index, replacing H&R Block, Kohl’s and Coty. It did not mention Tesla, however.

At 1200 BST, the shares were down 9.3% in pre-market trade to $379.60.

Neil Wilson, chief market analyst at Markets.com, said: "The market was surprised by Tesla not being included but it’s probably more of an overreaction in the pre-market trade (-10% looks excessive for simply not being included in index at this stage).

"However, we did talk a lot about how possible inclusion in the S&P 500 was a big driver of the stock’s rally earlier in the year and therefore being snubbed will maybe force some funds to rethink whether they need to hold such a high beta stock if it’s not part of the index."