After showing a fourth straight quarter of profitability, many assumed Tesla Inc TSLA would be added to the S&P 500. After hitting this milestone, the electric vehicle maker qualified for entry into the index of the United State's 500 largest companies.
After the S&P 500 added Etsy Inc. ETSY, Teradyne Inc TER and Catalent CTLT on Friday evening, the lack of a Tesla announcement sent shares sinking. Meeting qualifications does not automatically mean a company will be added to the index, as a committee makes the final decision on which stocks to add each month.
"It was viewed as almost a consensus move based on all the metrics that Tesla was likely to get into the S&P 500 club this time around and thus will have a negative knee jerk investor reaction accordingly in an already white knuckle tape," Wedbush analyst Dan Ives wrote in a note.
"The profitability metrics and forecast likely was the swaying factor that might have excluded Tesla this time around. In a nutshell Tesla not getting into the S&P 500 will be a head scratcher to the bulls that viewed this as virtually a lock given all the parameters met."
Ives has a Neutral rating on Tesla and is one of the company's more vocal analysts.
Benzinga's Take: Many assumed Tesla would be added to the S&P 500 index. The company is currently one of the top 10 largest in the U.S. based on market cap. While it won't affect day to day operations, it will hurt the share price. Tesla's stock was down 6.3% to $392 per share in Friday's after-hours session.
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