Tesla skids 20% after S&P 500 snub, GM’S $2-bn move on Nikola KIT REES AND STEFAN NICOLA

Tesla shares slid on Tuesday after the electric-vehicle maker missed out on being included in the S&P 500 Index, taking investors who had bet on its entry to the benchmark by surprise.

Tesla shares fell as much as 20 per cent in intra-day trade on Tuesday, the biggest one-day loss since early February. Declines started premarket and worsened as General Motors said it would take a $2 billion equity stake in Nikola Corp. and partner with the fledgling truck maker to engineer and manufacture its Badger pickup. The news lifted Nikola shares by 46 per cent while GM rose 8 per cent.

Ahead of the S&P’S Friday announcement, Tesla’s price had largely reflected the assumed inclusion, said Baird analyst Ben Kallo, who called the decision “a relatively surprising development.” Instead of Elon Musk’s Tesla, S&P Dow Jones Indices added online retailer Etsy Inc, chip gear maker Teradyne Inc and medical technology firm Catalent. “We think shares were reflecting expectations for substantial passive inflows,” with an estimated $4.5 trillion of assets indexed to the S&P 500, Kallo wrote in a note Tuesday. “We think the stock could be under pressure following the delay of S&P 500 inclusion, particularly from investors who bought ahead of the announcement expecting an opportunity to sell to passive funds.” Kallo said he still expects Tesla will eventually be added to the benchmark, and the company’s

“Battery Day” event planned for September 22 could be a positive catalyst. US shares tumbled, though

major indexes held above session lows, as volatility continued to grip financial markets. The Nasdaq 100 fell as much as 4.3 per cent before paring the drop to less than 3 per cent in early trade.