S&P 500 adds three companies not named Tesla — ‘a bit of a shocker,’ analyst says
Three new names will be added to the S&P 500 index this month, but none of them are Tesla Inc.
S&P Dow Jones Indices announced Friday afternoon that it will add three companies to the S&P 500 SPX, -0.81% — Catalent Inc. CTLT, -2.83% , Etsy Inc. ETSY, -3.58% and Teradyne Inc. TER, -4.06% Tesla Inc. TSLA, +2.78% was thought to be in line for the addition after announcing a fourth consecutive quarter of profitability, a requirement of the index, which many observers cited as a reason for a gigantic increase in the electric-car company’s stock in recent weeks.
“S&P 500 inclusion now likely a done deal,” Wedbush analyst Dan Ives said after Tesla reported a profitable quarter in July.
When reached Friday, Ives said, “The Champagne was on ice to get into the S&P 500, [it] was baked into shares.”
“This was a bit of a shocker and the Street assumed this was a foregone conclusion,” Ives said in an email to MarketWatch. “Tesla not getting into the S&P 500 club is a head scratcher and the stock will likely be down for the indexing implications.”
Ives reiterated his neutral rating on Tesla shares in a note later Friday. Only 22% of sell-side analysts tracked by FactSet consider Tesla a “buy” as of Friday afternoon, which was actually an increase from earlier in the week, but still well lower than other stocks in the S&P 500 index.
Tesla stock has added more than 31% since announcing second-quarter earnings on the afternoon of July 22, though that performance has declined this week — at the end of Monday’s trading session, the stock had gained 56% since earnings. Shares have suffered this week in the wake of a stock split, the announcement of a plan to sell up to $5 billion in fresh shares, and insider selling. Overall, the electric-car company’s shares have still quintupled this year, pushing its market capitalization to $380 billion as of Friday’s closing bell.
Three previous members of the S&P Midcap 400 will move up to the larger index instead, replacing three other companies that moved down to the midcap index, H&R Block Inc. HRB, +0.73% , Coty Inc. COTY, +6.31% and Kohl’s Corp. KSS, +2.44% The changes will take effect before the open of trading on Sept. 21.
Tesla stock fell more than 6% in after-hours trading following the announcement. Catalent shares rose nearly 3%, Etsy shares added more than 5%, and Teradyne stock increased more than 2%.