- Shares of electric vehicle maker drops 6.3% in premarket trade
- Today marks the first trading of trading on the S&P 500
Tesla Inc. shares fell 6.3% in premarket trading on Monday as the electric vehicle maker marks its trading debut on the S&P 500 Index.
Futures contracts on the S&P 500 plunged 2.5%, following European stocks lower after several major countries moved to suspend travel from the U.K. amid concerns about a new strain of Covid-19.
Tesla has catapulted 731% this year in anticipation of the historic inclusion, making it the biggest company ever to be added to the benchmark. The EV pioneer will also be joining the S&P 100, replacing oil and gas firm Occidental Petroleum Corp., which fell 12% premarket.
Traders who spent most of the year pushing up shares of Tesla in anticipation of surging demand from index funds saw its climax Friday, as frantic purchases by passive managers drove the shares up almost 5% as exchanges closed. At the end of the day, Tesla shares closed at an all-time high. More than $150 billion worth of Tesla shares traded on Friday, ahead of the index inclusion.
“There is strong precedence for positive returns for stocks prior to S&P 500 inclusion and post announcement, but very limited precedent for near term out performance post inclusion,” Sanford C. Bernstein analyst Toni Sacconaghi wrote in a note earlier this month.