Shares of Tesla Inc. declined in their S&P 500 debut Monday as the massive wave of demand that had propelled the stock ahead of its inclusion subsided.
The electric-car maker’s shares slumped 5.1% in morning trading, suggesting some investors were cashing out following Tesla’s addition to the S&P 500. The declines in Tesla, the sixth-largest company in the market-cap-weighted index, contributed less than one-tenth of a percentage point to the S&P 500’s 1.2% slide.
The swoon also coincided with broader stock-index declines as investors grew jittery about worsening coronavirus cases in the U.K and stricter lockdown measures. The worsening cases served as a wake-up call to many after enthusiasm about coronavirus vaccinations has pushed stocks to records in recent weeks.
For Tesla investors, Monday’s slide was a small dent in what has been an otherwise blockbuster year of gains. Shares of the Palo Alto, Calif., company are up 687% this year and set a record Friday, creating scores of millionaires who had bet heavily on the company and its charismatic and sometimes controversial chief executive, Elon Musk. A significant chunk of those gains came after S&P Dow Jones Indices last month said it would add Tesla to the benchmark, with Tesla rising nearly 6% on Friday alone.
But the picture is different for index investors who on Monday suddenly found themselves owning a piece of the most valuable car maker in the world. Investors in the exchange-traded fund, one of the biggest tracking the benchmark, and other index-tracking ETFs and mutual funds that had missed out on Tesla’s rally are now feeling the impact of the car maker’s slide on Monday.