Tesla slides 7% as it enters the S&P 500 as its 5th-largest member
- Tesla sank as much as 7% 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.
- 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.
- Tesla fell further into the close after Reuters reported Apple plans to start producing its own electric car by 2024.
- Watch Tesla trade live here.
Tesla dipped as much as 7% on Monday as the electric-car maker made its S&P 500 debut.
The company entered 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.
Counting both of Alphabet's share classes together, Tesla becomes the index's sixth-largest member.
Tesla's entry in the S&P 500 followed a chaotic Friday trading session in which shares whipsawed minutes before markets closed. Frothy trading dragged shares 4.2% lower before a flurry of investors piling into the stock erased the loss and Tesla closed 6% higher. Roughly 222 million shares changed hands on Friday, more than four times the stock's average daily volume.
The company fell further into Monday's close after Reuters reported that Apple plans to begin producing its own electric car by 2024. The vehicle is expected to use unique battery designs that allow for longer range and improved safety.
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 affect the index's valuation very much, but its outsize volatility will have a "small mechanical impact" on its overall performance, Goldman Sachs analysts said in a note on Wednesday. The team found that had Tesla joined the index at the start of the year, its massive rally would've lifted its total returns by 2 percentage points.
Tesla's Monday move matched a broader market slump. US equities fell as a new coronavirus strain 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 $649.86 on Monday. The company has 20 "buy" ratings, 44 "hold" ratings, and 19 "sell" ratings from analysts.
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