- Tesla sank as much as 6% on Monday as the company made its S&P 500 debut.
- The automaker joined the benchmark index as its fifth-largest member at the market open on Monday.
- Tesla boasts a weighting of 1.69% in the S&P 500, landing between Facebook and Alphabet’s class A shares.
- The entry caps a wild 2020 rally for the automaker’s shares. Tesla stock sits more than 730% higher year-to-date, lifted by analyst upgrades and robust demand from retail investors.
- The Monday slide follows a turbulent Friday session that saw outsize trading volume erase a 4.2% loss and lift shares 6% into the close.
- Watch Tesla trade live here.
The company enters the benchmark with a 1.69% weighting, making it the S&P 500’s fifth-largest constituent. Only Apple, Microsoft, Amazon, and Facebook will exert a larger influence on the index’s day-to-day movements.
When counting both of Alphabet’s share classes together, Tesla becomes the index’s sixth-largest member.
Tesla’s entry in the S&P 500 follows a chaotic Friday trading session that saw shares whipsaw just minutes before markets closed. Frothy trading dragged shares 4.2% lower before a flurry of investors piling into the stock erased the loss and saw Tesla close 6% higher. Roughly 222 million shares changed hands on Friday, more than four times the stock’s average daily volume.
Read more: A chief market strategist at a $5 billion firm shares her recommendation on when to buy Tesla as it joins the S&P 500 – and explains why the index funds snatching it up may not get a big boost from the electric-car maker’s inclusion
Tesla’s dip does little to dent its extraordinary rally through 2020. The automaker’s shares stand more than 730% higher year-to-date, boosted by bullish analyst upgrades, strong demand from retail investors, and steady profitability.
Tesla’s membership in the S&P 500 won’t impact the index’s valuation very much, but its outsized volatility will have a “small mechanical impact” on its overall performance, Goldman Sachs analysts said in a Wednesday note. The team found, had Tesla joined the index at the start of the year, it’s massive rally would’ve lifted its total returns by two percentage points.
To be sure, Tesla’s Monday move matches a broader market slump. US equities fell as a new strain of the coronavirus in the UK spurred travel restrictions and augmented concerns of a prolonged fight against COVID-19. Travel and energy stocks were among the hardest hit.
Tesla closed at $695 on Friday. The company has 20 “buy” ratings, 44 “hold” ratings, and 19 “sell” ratings from analysts.
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