Tesla Inc. (NASDAQ:TSLA) shares fell the most ever in trading Tuesday after the electric-vehicle maker was snubbed for inclusion in the S&P 500 Index and General Motors (NYSE:GM) announced a strategic partnership with rival electric vehicle maker Nikola (NASDAQ:NKLA).
Tesla shares plummeted 21% Tuesday after General Motors said it would take a $2-billion U.S. equity stake in Nikola and partner with the fledgling truck maker to engineer and manufacture its all electric Badger pick-up truck. The news lifted Nikola shares by 41% while GM stock rose 7.9%.
Tesla’s share price had largely reflected the assumed inclusion ahead of the S&P’s Friday announcement. But instead of Elon Musk’s Tesla, S&P Dow Jones Indices added online retailer Etsy Inc. (NASDAQ:ETSY), chip gear maker Teradyne Inc. (NASDAQ:TER) and medical technology firm Catalent Inc. (NYSE:CTLT)
Tesla’s failure to make it into the S&P 500 also contributed to the slide in the company’s stock price. Tesla’s share price had soared nearly 300% this year, making it the second-best performer in the NASDAQ 100 Index behind Zoom Video Communications (NASDAQ:ZM)
The electric carmaker reported its fourth quarterly profit in a row in July and its upcoming Battery Day event may also have boosted optimism since many investors expect the company to unveil new technologies at that event. The relentless rally has pushed Tesla’s valuation above that of Toyota Motor Corp. (NYSE:TM) and made Tesla the world’s biggest carmaker.
Tesla shares entered correction territory last week, following news that the company’s second-largest shareholder cut its holding, as well as the market slowly digesting Tesla’s plan to sell $5 billion U.S. of additional shares.
