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Tesla slides on its first day of trading on S&P 500 index

Elon Musk stands in front of the Tesla logo, speaking and gesturing with both hands.
Tesla CEO Elon Musk unveils the Model Y in 2019. The company has been added to the S&P 500, making it one of the index’s most heavily weighted stocks.
(Jae C. Hong / Associated Press)

Tesla Inc. was among the biggest drags on the S&P 500 in its first day of trading on the benchmark.

The electric-vehicle maker, which now represents 1.6% of the index and is among its heaviest-weighted stocks, fell as much as 6.3% as it retraced gains from Friday when tens of millions of shares were purchased by index-fund managers. The S&P 500 fell as much as 2% amid fears of a new coronavirus strain in the U.K.

“Hedge funds will treat this as a negative catalyst for Tesla given buying pressure eases off very quickly,” Roth Capital Partners analyst Craig Irwin said in an interview.

Institutional buying of Tesla surged late Friday as index-tracking managers rushed to add the shares to their funds. Almost $60 billion worth of stock changed hands at $695 a share, most of it in one giant trade in the session’s waning seconds. The price was about 5% higher than Tesla’s level just prior to the close. More than $150 billion worth of Tesla shares traded on Friday, ahead of the index inclusion.

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Former engineer says Tesla forced her out and then libeled her. Her lawsuit against the company is testing the limits of the arbitration agreements that bind millions of American workers.

Other electric-vehicle companies, whose shares have gained significantly over the past month after Tesla’s S&P 500 inclusion was announced, were also weak on Monday. Some of the biggest declines came from Nikola Corp., Electrameccanica Vehicles Corp. and Workhorse Group Inc.

Tesla soared 731% this year through Friday in anticipation of the historic inclusion, making it the biggest company ever to be added to the benchmark. The EV pioneer also joined the S&P 100, replacing oil and gas firm Occidental Petroleum Corp.

“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 outperformance post inclusion,” Sanford C. Bernstein analyst Toni Sacconaghi wrote in a note earlier this month.


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