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James Li
James Li
Articles (1353)  | Author's Website |

Tesla Veers Off Course on S&P 500 Index Snub

Index committee adds 3 names, but bypasses EV giant

Shares of Tesla Inc. (NASDAQ:TSLA) nosedived over 21% on Tuesday on the Standard & Poor's 500 Index committee's decision to dismiss the company from inclusion in the index.

Instead of the Palo Alto, California-based electric vehicle giant, Etsy Inc. (NASDAQ:ETSY), Teradyne Inc. (NASDAQ:TER) and Catalent Inc. (NYSE:CTLT) received their invites into the index according to the S&P Dow Jones Indices press release from Sept. 4.

Markets continue post-Labor Day slide, driven by Tesla and Big Tech

The tech-heavy Nasdaq Composite closed at 10,847.69, down 465.44 points or 4.11% points from last Friday's close of 11,313.14.

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Tesla shares closed at $330.21, down 21.06% from the previous close of $418.32 on its S&P 500 snub despite "widespread speculation" that the company would be added according to CNBC. Investors had expected Tesla to be included in the index following its June-quarter profit, its fourth consecutive quarterly profit based on generally accepted accounting principles.

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Tech stocks added to the decline as investors continued taking profits from Big Tech companies, continuing the selloff from late last week. According to the Aggregated Portfolio of Gurus, a Premium feature of GuruFocus, broadest-owned guru stocks like Microsoft Corp. (NASDAQ:MSFT) and Facebook Inc. (NASDAQ:FB) had over 20 guru sells during the second quarter.

Etsy

Etsy operates a marketplace platform in which sellers list handmade and vintage products directly. According to GuruFocus, the Brooklyn, New York-based company's profit margins and returns are outperforming over 92% of global competitors, suggesting good profitability.

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Gurus with large holdings in Etsy include Jim Simons (Trades, Portfolio)' Renaissance Technologies and Steven Cohen (Trades, Portfolio)'s Point72 Asset Management.

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Teradyne

Teradyne designs and develops automatic test systems for use in semiconductors, wireless products and electronics. GuruFocus ranks the North Reading, Massachusetts-based company's financial strength and profitability 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 7 and profit margins and returns that outperform over 92% of global competitors.

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Catalent

Catalent focuses on advanced delivery technology and development solutions for drugs, biologics and consumer health products. GuruFocus ranks the Somerset, New Jersey-based company's profitability 6 out of 10: Operating margins are outperforming over 69% of global competitors despite returns outperforming just over 58% of global drug manufacturers.

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See also

Tesla remains the most-voted stock in the "Not Interested" virtual basket: As of Tuesday, 23 GuruFocus users dismissed the EV giant as a potential investment.

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According to GuruFocus, Tesla's price valuations are underperforming over 97% of global competitors, suggesting significant overvaluation. The GuruFocus Value Line shows that Tesla's share price is "off the charts," significantly above the dark-red zone.

Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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