Tesla shares register the sharpest single-day drop ever on Tuesday, loss overshadows combined market value of GM and Ford

Tesla Inc (TSLA) lost almost $80 billion of its market capitalization on Tuesday, after it was surprisingly excluded from the S&P 500 index. The amount lost exceeded the combined market value of General Motors Co and Ford Motor Co.

Market players and Wall Street analysts largely anticipated Tesla to be included in the S&P 500 index, after the US electric car maker reported a profit for a fourth straight quarter in July.

Tesla shares closed lower for the fifth time in the past ten trading sessions on NASDAQ on Tuesday. It has also been the stock’s steepest single-session loss ever recorded. The stock went down 21.06% ($88.11) to $330.21, after touching an intraday low at $330.01, or a price level not seen since August 14th ($325.33).

Shares of Tesla Inc have risen 294.66% so far in 2020 compared with a 26.74% gain for the benchmark index, Nasdaq 100 (NDX).

In 2019, Tesla’s stock went up 25.70%, thus, it underperformed the Nasdaq 100, which registered a 37.96% gain.

The S&P Dow Jones Indices surprised markets when it announced that Etsy Inc (an online craft seller), Catalent Inc (a pharmaceutical tech company) and Teradyne Inc (a semiconductor equipment manufacturer) had been added to the benchmark stock index instead.

“On the one hand, the slide in the share price is due to its non-inclusion in the S&P 500, but on the other hand the slide is also a normalization of the company’s valuation,” Frank Schwope, an analyst at NORD/LB, was quoted as saying by Reuters.

Analyst stock price forecast and recommendation

According to CNN Money, the 32 analysts, offering 12-month forecasts regarding Tesla Inc’s stock price, have a median target of $297.50, with a high estimate of $800.00 and a low estimate of $19.00. The median estimate represents a 9.91% downside compared to the closing price of $330.21 on September 8th.

The same media also reported that at least 18 out of 37 surveyed investment analysts had rated Tesla Inc’s stock as “Hold”, while 8 – as “Sell”. On the other hand, other 8 analysts had recommended buying the stock.