Tesla (TSLA) has been excluded from the latest S&P 500 reshuffle despite being worth 9 times more than all 3 new companies being included in the index combined.
Over the last few months, Tesla has been rumored to be included in the S&P after it achieved the requirements for eligibility.
The S&P 500, or simply the S&P, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.
It is basically a representation of the US stock market, and it is often updated to add growing companies in order to better represent the market.
There are a few basic eligibility requirements, like consecutive quarterly profit and high revenue.
Despite hitting those requirements, Tesla wasn’t included in a reshuffle that was announced today by the S&P.
The index reported today that H&R Block, Coty, and Kohl’s were downgraded and Etsy, Teradyne, and Catalent are joining the S&P 500:
“S&P MidCap 400 constituents Etsy Inc. (NASD:ETSY), Teradyne Inc. (NASD:TER), and Catalent Inc. (NYSE:CTLT) will move to the S&P 500, replacing H&R Block Inc. (NYSE:HRB) Coty Inc. (NYSE:COTY) and Kohl’s Corp. (NYSE:KSS), all of which will move to the S&P MidCap 400.”
That’s despite the fact that Tesla is currently worth more than nine times the market capitalizations of all three of those companies combined.
The Index Committee didn’t comment on why Tesla was overlooked.
Tesla’s stock (TSLA) fell over 6% in aftermarket trading after the announcement of the reshuffle didn’t include the automaker.
I won’t pretend to understand the S&P committee, but if your goal is to be representative of the US stock market, I would think that Tesla should be included.
It generates tens of billions in revenue per year, has been profitable for four quarters in a row, and is worth over $300 billion.
What do you think? Let us know in the comment section below.
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